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Crude oil edges higher on U.S. supply decline, weaker dollar

Published 08/25/2011, 04:24 AM
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Investing.com – Crude oil futures edged higher on Thursday, amid easing concerns over a slowdown in U.S. demand, while a weaker U.S. dollar also lent support as investors looked ahead to Friday’s speech by Federal Reserve Chairman Ben Bernanke.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at USD85.61 a barrel during European morning trade, gaining 0.51%. 

It earlier rose as much as 0.74% to trade at a daily high of USD85.81 a barrel.

Weekly data from the U.S. Energy Information Administration released Wednesday showed that U.S. crude oil inventories declined by 2.2 million barrels last week, confounding expectations for a 0.8 million barrel increase.

U.S. crude supplies rose by 4.2 million barrels in the preceding week.

Total U.S. crude oil inventories stood at 351.8 million barrels as of last week, remaining above the upper limit of the average range for this time of year.

Total motor gasoline inventories increased by 1.4 million barrels, disappointing expectations for a 1.0 million barrel drawdown.  

Meanwhile, concerns over the U.S. economic outlook eased after data on Wednesday showed that U.S. durable goods orders rose the most in four months in July, while core durable goods orders, which exclude transportation items, rose unexpectedly.

Weakness in the U.S. dollar also supported prices, as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.26% to hit 73.90.

Meanwhile, markets continued to look ahead to Friday’s speech by Federal Reserve Chairman Ben Bernanke for any hints regarding fresh stimulus measures.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery added 0.51% to trade at USD110.88 a barrel. The spread between the two contracts widened to USD25.27, re-approaching the record high of USD26.42 it hit on August 19. 

In a report released late Wednesday, Wall Street lender Citibank estimated that Libya could resume its full oil production capacity of 1.6 million barrels per day by the end of 2012.  

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