ND: Oil Up On Inventory Data; Market Awaits Fed News
--Crude-oil futures rise after steep U.S. inventory draw
--EIA: Crude-oil stockpiles plunged 6.5 million barrels
--Traders await Federal Reserve news due later Wednesday
NEW YORK--Crude-oil futures climbed after the government reported a steep drop in U.S. oil inventories last week, though market participants held off on laying big trades ahead of a disclosure on monetary policy from the Federal Reserve.
Light, sweet crude oil for September delivery rose 59 cents, or 0.7%, to $88.65 a barrel on the New York Mercantile Exchange. Brent crude oil on ICE Futures Europe rose 87 cents, or 0.9%, to $105.79 a barrel.
The U.S. Energy Information Administration said crude-oil stockpiles fell 6.5 million barrels during the week ended July 27, much larger than the 800,000-barrel draw expected from analysts polled by Dow Jones Newswires. The drop was driven largely by a sharp decrease in imports, which fell by 1.2 million barrels a day.
The draw "wasn't a complete surprise," said Peter Donovan, vice president of Vantage Trading and a Nymex floor broker, after an industry group Tuesday said inventories fell an even bigger 11.6 million barrels.
But traders are likely holding off on any big moves until the Fed discloses results of its two-day policy meeting, due at 2:15 p.m. EDT, said Carl Larry, president of Oil Outlooks and Opinions.
"It's a waiting game right now," Mr. Larry said.
Gasoline stockpiles last week fell 2.2 million barrels, according to the EIA. Inventories of distillates, which includes heating oil and diesel, dropped one million barrels, while refinery utilization fell 0.8 percentage point to 92.2% of capacity.
Analysts expected the EIA to report a 500,000-barrel rise in gasoline stocks. Stocks of distillates were seen rising 800,000 barrels. Refinery utilization was expected to fall 0.3 percentage point.
Markets remained focused on the prospect of the Federal Reserve disclosing additional monetary-stimulus measures later Wednesday. Oil-market participants have closely watched Fed moves because of their impact on the dollar, which in turn affects the value of dollar-denominated crude oil. Previous stimulus measures have tended to boost the price of oil by weakening the dollar, thereby making crude oil cheaper for holders of other currencies.
Analysts, however, said the Fed is likely to hold off on new stimulus measures unless further evidence of a slowing economy emerges.
The Wall Street Journal Dollar Index, which tracks the dollar against a basket of major currencies, was recently 0.9% higher at 71.735.
Front-month September reformulated gasoline blendstock, or RBOB, recently rose 5.02 cents, or 1.8%, to $2.8245 a gallon. September heating oil rose 1.76 cents, or 0.6%, to $2.8656 a gallon.
--Nicole Friedman contributed to this article.
Write to Dan Strumpf at dan.strumpf@dowjones.com.
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