Crude oil futures trade near 5-month highs on U.S. supply outlook

Investing.com - West Texas Intermediate oil futures traded near a five-month high on Thursday, as concerns over a supply glut eased following the first crude stock draw in almost six months at the Cushing, Oklahoma, hub last week.

On the New York Mercantile Exchange, crude oil for June delivery rose 40 cents, or 0.67%, to trade at $58.98 a barrel during European morning hours.

A day earlier, Nymex oil prices rallied to $59.33, the most since December 12, before ending at $58.58, up $1.52, or 2.66%.

The U.S. Energy Information Administration said Wednesday that crude oil inventories rose by 1.9 million barrels last week, below expectations for an increase of 2.3 million barrels.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, fell for the first time in almost six months, dropping by 500,000 barrels to 61.7 million.

Total U.S. crude oil inventories stood at 490.9 million barrels as of last week, the most in at least 80 years, even as drilling activity fell.

U.S. oil futures are up almost 20% in April due to mounting expectations that U.S. shale oil production has peaked and may start falling in the coming months amid an ongoing collapse in rigs drilling for oil.

According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 31 last week to 703, the lowest since October 2010. It was the 20th straight week of declines.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for June delivery tacked on 12 cents, or 0.18%, to trade at $65.97 a barrel.

On Wednesday, London-traded Brent futures rose to $66.72, the highest level since December 10, before closing at $65.84.

Brent futures are up more than 17% so far in April as some investors bet that a bottom had been reached after a nine-month long rout. But prices are still down approximately 43% since June, when futures climbed near $116.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $6.99 a barrel, compared to $7.26 by close of trade on Wednesday.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.8% to trade at 94.57 early on Thursday, the weakest level since February 26.

The Federal Reserve kept interest rates on hold following the conclusion of its Federal Open Market Committee meeting on Wednesday, but offered little hints on the timing of its first rate hike in nearly a decade.

In its policy statement, the Fed said it will take into account labor market conditions, inflationary pressures and expectations of international financial developments when it decides on the timing of a rate increase.

The central bank removed all calendar references on a potential window for raising rates from its statement, adding to uncertainty over the timing of a Fed rate hike.

The statement came after data on Wednesday showed that the U.S. economy grew just 0.2% in the three months to March, slowing sharply from 2.2% in the final quarter of 2014. It was the slowest rate of growth in a year.

Investors were looking ahead to weekly data on initial jobless claims later in the day for further indications on the strength of the economy.