The price of US light crude rose by 1.56% to $104.70 a barrel, lifted by news from the Commerce Department that the US economy expanded faster than expected in the second quarter. Gross Domestic Product grew at an annualised pace of 1.7% in the second quarter, substantially higher than the 1% that had been projected by a Reuters poll of analysts.
US GDP topping expectations plays into a stronger outlook for oil demand, as the US as a nation is the largest consumer of oil globally, and this is naturally supportive for the price of oil.
The rise in the price of oil comes in spite of a report from the Energy Information Administration showing a surprise rise in crude oil inventories last week. The US stockpile of crude increased by 431,000 barrels; a fall of more than 2 million barrels had been expected, according to a survey conducted by Bloomberg.
Supplies at Cushing, Oklahoma, the price settlement point for crude futures on the CME, declined by 1.9 million barrels though. A glut of oil at Cushing has long constrained the price of US crude futures, but the big drop there last week may indicate the bottleneck is easing. Overall rising supplies is fundamentally bearish, nevertheless, but has been outweighed today by the strength of the GDP data.