Oil jumps to two-week high as demand continues to drain stockpiles

Futures rose as much as 1.3 per cent after the Energy Information Administration reported American crude inventories fell by 8.5 million barrels last week

Oil jumps to two-week high as stockpile draw Oil climbed to its highest level in more than two weeks as strong summer demand in the US continued to drain stockpiles.

Futures rose as much as 1.3 per cent after the Energy Information Administration (EIA) reported American crude inventories fell by 8.5 million barrels last week, a seventh straight decline that was higher than all industry and analyst estimates. Stockpiles of gasoline and distillate fuels also shrank, helping ease concerns about slowing consumption.

Still, oil surrendered some of its gains after an initial burst following the EIA data, as investors waited to see if the Federal Reserve will cut US interest rates as expected to boost the economy.

Prices are ending July little changed, after a volatile month in which growth concerns competed with simmering Middle East tensions that risk disrupting global supplies. 

US and Chinese negotiators plan to meet again in early September, as the latest round of talks to resolve a trade dispute ended with signs that the top two economies discussed the Asian nation’s purchases of American farm products.

“The EIA report in and of itself was constructive, but these factors outside the market are weighing prices down,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

West Texas Intermediate for September delivery rose to as high as $58.82 a barrel on the New York Mercantile Exchange and traded up 32 cents at $58.37 at 12:43 p.m., on track for its fifth straight advance.

Brent crude for September, which expires Wednesday, added 46 cents to $65.18 a barrel on the ICE Futures Europe exchange. The more-active October contract was at $65.06, up 43 cents. The September contract traded at a $6.82 premium to WTI for the same month.