Oil Gains On Inventory Data, Lifts Stocks

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 24, 2016. Pix: Reuters
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OIL prices rose on Wednesday after a sharper-than-expected fall in inventories and gains in energy shares lifted world stock markets.

Growing bets of a possible Federal Reserve rate increase as in June or July reduced demand for U.S. government debt while keeping the dollar near its highest level against the euro in roughly 10 weeks.

Comments from policymakers in recent days and upbeat U.S. economic data have raised expectations of a rate hike in June, much sooner than previously thought.

“Investors have started to seriously contemplate the prospect of a hike at the start of the summer,” said Luke Bartholomew, global macro investment manager at Aberdeen in London.

Energy Information Administration data showed U.S. crude stockpiles fell last week as imports dropped and refineries cut output. Brent oil LCOc1 was up 45 cents at $49.06, while U.S. crude was up CLc1 26 cents at $48.88.

Energy shares helped to boost global stock indexes, with shares of Chevron (CVX.N) up 1.1 percent at $101.28.

The Dow Jones industrial average .DJI was up 153.64 points, or 0.87 percent, to 17,859.69, the S&P 500 .SPX had gained 14.61 points, or 0.7 percent, to 2,090.67 and the Nasdaq Composite .IXIC had added 30.01 points, or 0.62 percent, to 4,891.07.

MSCI’s all-country world stock index .MIWD00000PUS rose 1 percent, while the pan-European FTSEurofirst 300 index .FTEU3 of leading regional stocks was up 1.5 percent.

A new debt deal for Greece seemed have headed off the risk of another round of uncertainty over its finances and even its future in the euro zone after a funding crisis a year ago.

The U.S. dollar rose against the yen for a second straight day and hovered near its highest level in roughly 10 weeks against the euro.

The euro was last down 0.04 percent against the dollar at $1.1144. EUR=

U.S. Treasury prices dipped, with short and medium term yields hitting 10-week highs. Two-year yield US2YT=RR and five-year yield US5YT=RR reached 10-week highest at 0.938 percent and 1.424 percent, respectively.

Gold dropped to a seven-week low amid the Fed expectations. Spot gold XAU= was last down 0.5 percent at $1,220.41 an ounce.

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