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Oil Futures Settle Notably Higher

Crude oil futures ended notably higher on Wednesday, as official data showed a sharp fall in U.S. crude inventories last week. Data showing improvement in manufacturing activity in the U.S., China and Germany contributed as well to oil's surge.

However, oil's upside was somewhat limited due to uncertainty about sustained increase in energy demand in the wake of reports showing sharp spikes in new coronavirus cases across the U.S. and in several other countries.

West Texas Intermediate Crude oil futures ended up $0.55 or about 1.4% at $39.82 a barrel.

Data released by U.S. Energy Information Administration (EIA) this morning showed crude inventories in the country fell by 7.2 million barrels in the week ended June 27, compared with an increase of 1.4 million barrels a week earlier.

The amount of oil stored at Cushing, Oklahoma, to settle WTI delivery fell a larger than expected 263,000 barrels, but that was less than the draw of 991,000 barrels the previous week, the data said. Gasoline inventory rose 1.2 million barrels last week, compared to a draw of 1.7 million barrels a week ago, while distillate stockpiles dropped by 593,000 barrels, compared to a build of nearly 250,000 barrels previously.

The American Petroleum Institute estimated on Tuesday a major draw in crude oil inventories of 8.156 million barrels for the week ending June 26, against analysts' forecasts for a draw of 710,000 barrels.

The API also reported a draw of 2.459 million barrels of gasoline for the week, while distillate inventories rose by 2.638-million barrels.

Meanwhile, the Organization of the Petroleum Exporting Countries' (OPEC) oil output hit the lowest in two decades in June as Saudi Arabia and other Gulf Arab members made larger cuts, a Reuters' survey found.

It was reported that the 13-member OPEC pumped 22.62 million barrels per day (bpd) on average in June, down 1.92 million bpd from May's revised figure.

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