Crude oil futures top USD99 a barrel after upbeat U.S. factory data

Investing.com – Crude oil futures were up sharply on Tuesday, extending strong gains after data showed that U.S. factory orders rose more than expected in May.

Investors also looked ahead to the release of key U.S. weekly supply data to gauge the strength of oil demand from the world’s largest consumer.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD99.02 a barrel during U.S. morning trade, up 1.05% on the day.

New York-traded oil prices rose by as much as 1.2% earlier in the day to hit a session high of USD99.16 a barrel, the strongest level since June 19.

Oil prices rose to the highest levels of the session after the Commerce Department said U.S. factory orders rose by a seasonally adjusted 2.1% in May, compared to expectations for an increase of 2%.

Market players now looked ahead to the release of fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 2.7 million barrels.

Oil traders also looked forward to this week’s highly-anticipated U.S. nonfarm payrolls data for indications of how the recovery in the U.S. labor market is progressing.

Any improvement in the U.S. economy was likely to reinforce the view that the Federal Reserve will begin to taper its bond purchase program in the coming months.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rose 0.7% to trade at USD103.71 a barrel, with the spread between the Brent and crude contracts standing at USD4.69 a barrel, the narrowest level since January 2011.

The gap between the contracts has been on the decline in recent weeks, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures.

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