Oil closes higher, with dollar weakening, drop in DoE and Fed inventories

Oil futures contracts closed higher on Wednesday (27). Oil was boosted by the announcement of a drop in US oil and fuel inventories.

Then, the commodity also benefited from the weakening of the dollar, amid the monetary policy decision of the Federal Reserve (Fed), which raised interest rates by 75 basis points.

On Comex, the metals division of the New York Mercantile Exchange (Nymex), a barrel of WTI for September ended up 2.40%, or $2.28, at $97.26, the highest level in a week.

Meanwhile, Brent for October rose 2.22%, or $2.21, to $101.67 on the Intercontinental Exchange (ICE).

Oil inventories in the United States dropped by an astonishing 4.5 million barrels to 422.1 million barrels in the week ended July 22, the US Department of Energy (DoE) said today.

The result showed a much greater retreat than the predicted 700,000 barrels. Gasoline inventories decreased by 3.3 million barrels to 225.1 million barrels, against a forecast of a drop of 100,000 barrels.

Distillates had a drop of 800,000 barrels, to 111.7 million barrels, when the projection was for a high of 200,000 barrels.

Later, oil was boosted in the minutes following the Fed’s monetary policy decision as the dollar lost steam.

Capital Economics says it “suspects” that the US central bank will again raise interest rates in the US to a lesser extent, with a 50 basis point hike being the most likely scenario for the next monetary decision in September.

“There is no other way to look at energy prices today and not have an optimistic outlook,” said Tariq Zahir, managing member at Tyche Capital Advisors.

“We feel that we may see oil recover to the $100 level in the coming days and weeks.” With information from Dow Jones Newswires.