Investing.com -- Crude futures surged 3% on Wednesday, bouncing off near multi-year lows after an unexpected draw in U.S. crude stockpiles last week provided a boost to oil prices ahead of the Christmas holiday.
On the New York Mercantile Exchange, WTI crude for February delivery traded in a broad range between $36.28 and $37.77 a barrel, before settling at $37.50, up 1.36 or 3.78% on the session. U.S. crude futures remain near six-year lows around $34 a barrel from earlier this week. As long-term concerns related to oversupply have persisted throughout 2015, Texas Long Sweet futures have plunged by more than 30%.
On the Intercontinental Exchange (ICE), brent crude for February delivery wavered between $36.28 and $37.47 a barrel, before closing at $37.38, up 1.27 or 3.50% on the day. North Sea brent futures hovered near 11-year lows from Tuesday's session when the price of the international benchmark of crude dipped below $35 a barrel for the first time since July, 2004. Both WTI and brent crude remain down by more than 10% since OPEC opted to leave it output quota unchanged at a closely-watched meeting earlier this month.
Meanwhile, the front month contract for WTI crude closed above brent for the second consecutive day as investors continued to digest last week's repeal of a 40-year ban on U.S. crude exports by legislators on Capitol Hill. In Tuesday's session, WTI closed at a premium over brent for the first time since August, 2010.
On Wednesday, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that U.S. commercial crude inventories decreased by 5.9 million barrels for the week ending on December 18. At 484.8 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 1.1 million barrels, while distillate fuel inventories decreased by 0.7 million barrels on the week.
It came a week after crude prices plunged last Wednesday when U.S. crude stockpiles surged by 4.8 million barrels for the week ending on Dec. 11. Analysts initially anticipated a build of 1.1 million barrels last week, but shifted expectations after the American Petroleum Institute reported a 3.6 million barrel draw on Tuesday evening.
Elsewhere, investors reacted to a bullish report from OPEC after the world's largest oil cartel predicted a tightening in the global supply-demand imbalance in its 2015 World Oil Outlook. By 2020, OPEC expects global demand to increase to 97.4 million barrels per day, up from forecasts of 96.9 million last year. In terms of OPEC demand, the 13-member group expects it to increase to 30.70 million bpd over the next five years after leveling off slightly from 2016 levels of 30.90 million bpd.
OPEC also expects global supply to increase to 97.6 million bpd by 2020 from a level in 2014 of 92.4 million bpd. The new projections represent a downward revision of approximately 1 million bpd from last year's outlook. OPEC triggered a massive sell-off in global crude last November with a strategic decision to leave its production ceiling above 30 million. Over the last year, crude prices have plunged more than 50%, as supply has greatly outpaced demand.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose by more than 0.45% to an intraday high of 98.66. Earlier this month, the index eclipsed 100.00 to reach its highest level in more than 12 months.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.