By Myra P. Saefong and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures climbed by as much as 1% Wednesday, finding support after a government report showed a decline in last week’s crude inventories that was generally in line with market expectations.
Traders also continued to keep an eye on developments in Greece, after Greek Prime Minister George Papandreou survived a no-confidence vote, and braced for comments from the U.S. Federal Reserve, which is preparing for an end to its latest round of asset purchases.
Crude for August delivery CL1Q +0.31% , which became the front-month contract Tuesday, tacked on 60 cents, or 0.6%, to $94.77 on the New York Mercantile Exchange after touching a high of $95.40 shortly after the supply data were released.
On Wednesday, the Energy Information Administration reported a decline of 1.7 million barrels in U.S. crude supplies for the week ended June 17.
The decline was larger than the 81,000-barrel fall reported by the American Petroleum Institute late Tuesday and was generally in line with expectations. Analysts polled by Platts were looking for a 2 million-barrel decrease, while Moody’s Analytics pegged market consensus at a decline of 1.825 million.
Motor gasoline supplies fell 500,000 barrels while distillate stocks added 1.2 million barrels in the latest week, the EIA report said.
Analysts polled by Platts expected a rise of 1 million for gasoline and an increase of 800,000 barrels for distillates.
The API had reported that gasoline inventories declined by 1.5 million barrels and distillate inventories shed 541,000 barrels.
Overall, however, the supply data don’t change the long-term picture for oil, said Darin Newsom, a senior analyst at Telvent DTN. “Pressure should soon build again.”
Pressure could come from renewed selling in commodities tied to a stronger dollar, commercial selling tied to demand that still isn’t all that strong, fear of a worsening global financial situation and investment money turning back to gold, he said.
Eye on policy makers
The market saw some encouraging developments in the euro-zone sovereign-debt situation, after the Greek government won a key confidence vote late Tuesday.
The vote paved the way for the country to approve additional austerity measures and receive additional financial aid, aimed at gaining approval from euro-zone finance ministers for the release of the next tranche of aid to Greece. Read more about Greece.
But “the Greek situation still seems bearish for stocks, bullish for [the U.S. dollar index], and therefore bearish for crude oil longer-term,” said Newsom.
For now, the dollar was weakening and weakness in the greenback tends to encourage investment in dollar-priced commodities such as oil.
The dollar index DXY -0.19% which measures the U.S. unit against a basket of six other major currencies, rose to 74.513, from 74.562 late Tuesday. It had climbed to as high as 74.866 earlier. Read more about currencies.
Meanwhile, traders awaited the Fed’s policy statement, which is due at 12:30 p.m. Eastern, followed by Fed Chairman Ben Bernanke’s press conference at 2:15 p.m. Eastern.
“I don’t look for much to happen if the Fed leaves things unchanged,” said Newsom.
The “rally in the dollar isn’t about fundamentals (fed fund rate) at this point — more of a safe haven buy given [European Union] situation,” he said.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Virginia Harrison is a MarketWatch reporter based in Sydney.
