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MTECHTIPS:-U.S. crude rallies sharply as Fed rate hike, China remain in focus

MTECHTIPS:-U.S. crude rallies sharply as Fed rate hike, China remain in focus

U.S. crude futures rallied sharply on Tuesday afternoon after touching down to fresh six-year lows earlier in the session, as the timing of an imminent rate-hike from the Federal Reserve and continual woes in China remained in focus. On the New York Mercantile Exchange, WTI crude for October delivery wavered between $41.95 and $43.38 a barrel, before settling at $43.09, up 0.68 or 1.60% on the session. Texas Long Sweet futures are still down approximately 17% over the last month of trading since hovering near $50 a barrel in late-July. On the Intercontinental Exchange (ICE), brent crude for October delivery traded in a tight range between $48.26 and $49.05 a barrel, before closing at $48.81, up 0.07 or 0.09% for the day. The spread between the international and U.S. benchmarks of crude stood at $5.72, below Monday’s level of $6.33 at the close. Earlier on Tuesday, U.S. crude futures hit its lowest level since 2009 in spite of indications that crude inventories nationwide could decline for a third consecutive week. The American Petroleum Institute (API) will release its weekly inventory on Tuesday after the bell. Separately, Wednesday’s government report from the U.S. Energy Information Administration (EIA) could show that U.S. crude stockpiles fell by 1.6 million barrels for the week that ended on August 14. A week earlier, U.S. crude stockpiles decreased by 1.7 million to 453.6 million, in line with analysts’ expectations for a 1.6 million draw. Crude inventories nationwide remain at their highest level at this time of year in at least 80 years. The draw was preceded by a 4.4 million decline for the week ending July 31, as crude production across the U.S. continues to level. Energy traders continue to monitor fluctuations in the dollar, ahead of Wednesday’s release of the minutes from the Federal Open Market Committee’s July meeting. Last week, Fed vice chairman Stanley Fischer expressed concern with the lack of inflation in the U.S. economy due to slower than expected growth. The Fed would like to see long-term inflation move toward its targeted goal of 2% before it starts to raise interest rates
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