Crude oil prices extended recent gains and climbed higher on Wednesday, lifting the futures contract to a fresh 9-month closing high.<\/p>\n
Oil prices continued to benefit from Russia and Saudi Arabia’s decision to extend their voluntary additional production cuts till the end of the year.<\/p>\n
Expectations of a drop in U.S. crude inventory last week contributed as well to the uptick in oil prices.<\/p>\n
Oil prices dropped earlier in the day amid concerns about outlook for demand due to prospects of further tightening by the Federal Reserve after data showed an unexpected acceleration in the pace of U.S. service sector growth in the month of August.<\/p>\n
West Texas Intermediate crude oil futures for October ended higher by $0.85 or about 1% at $87.54 a barrel.<\/p>\n
Brent crude futures settled at $90.60 a barrel, gaining $0.56 or about 0.6%.<\/p>\n
Earlier this week, Russia and Saudi Arabia announced that they will extend voluntary production cuts or 1 million bpd and 300,00o bpd, respectively, to the end of the year. These cuts are in addition to the cut agreed by OPEC and allies earlier this year. The group’s production cut is to run till the end of next year.<\/p>\n
This morning, a report from the Institute for Supply Management showed an unexpected acceleration in the pace of U.S. service sector growth in the month of August.<\/p>\n
The ISM said its services PMI rose to 54.5 in August from 52.7 in July, with a reading above 50 indicating growth in the sector. The increase surprised economists, who had expected the index to edge down to 52.5.<\/p>\n
The data may have added to recent concerns about the outlook for interest rates, as the report also showed an acceleration in the pace of price growth.<\/p>\n
Investors now await weekly oil reports from the American Petroleum Institute (API) and Energy Information Administration (EIA). The API report is due later today, while the EIA is scheduled to release its inventory data Thursday morning. <\/p>\n