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Oil prices surged 3% on Wednesday to a 10-month high near $100 a barrel as lower-than-expected U.S. inventories added to concerns about the impact of tight global crude supplies.
International benchmark Brent crude climbed to $96.86 a barrel, its highest intraday level since November 2022. U.S. West Texas Intermediate crude rose 3.7% to $93.77, according to weekly government data, as inventories at major delivery hubs fell further.
The latest report from the U.S. Energy Information Administration showed that U.S. commercial crude oil inventories fell by 2.2 million barrels from the previous week, further tightening supply, while WTI delivery point inventories fell to their lowest point in more than a year.
Ole Hansen, head of commodity strategy at Saxo Bank, said: “The price correction we saw last week has lost steam and market momentum is pointing towards higher prices.”
Oil prices have risen 30% since June as some of the world’s largest fossil fuel producers announced a series of supply cuts that will last until the end of the year, fueling investor concerns about persistent inflation in the United States and Europe.
The U.S. benchmark S&P 500 index gave up gains and was flat after hitting a three-month low in the previous session. The Nasdaq rose 0.2%.
U.S. government bonds stabilized after a sharp sell-off earlier this week on hawkish guidance from the Federal Reserve that interest rates are likely to remain higher for longer due to persistent inflation.
On Wednesday, the benchmark 10-year bond yield was unchanged at 4.55%, while the 30-year bond yield was unchanged at 4.69%.
The dollar, which tends to strengthen when investors anticipate rising interest rates, rose 0.4% against a basket of six peers, hitting a 10-month high.
Meanwhile, U.S. durable goods orders, a closely watched indicator of manufacturing activity, rose 0.2% month-on-month in August. The data improved sharply from a 5.6% contraction last month and was much higher than the 0.5% decline forecast in a Reuters poll of economists.
Attention turned to U.S. and euro zone inflation data due later this week as investors sought further insight into central bank’s upcoming monetary policy plans.
Separate data on Wednesday showed that profits in China’s industrial sector fell 11.7% annually in the first eight months of 2023, after falling at an even steeper 15.5% in the first seven months of this year, suggesting recent support measures may help stabilize the world’s second-largest economy.
Hong Kong’s Hang Seng Index rose 0.8% and China’s CSI index rose 0.2% after two days of losses. In Europe, the Stoxx Europe 600 index fluctuated between gains and losses across the region, but fell 0.2% after four days of losses.
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