WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange edged higher in afternoon trade Wednesday. Futures were lifted by a rally in U.S. equities after Federal Reserve Chairman Jerome Powell remarked on the U.S. economy, pointing to solid fundamentals supporting growth that eased concern over a slowing pace of the economic expansion, improving the outlook for fuel demand.
Wednesday afternoon, traders also positioned ahead of supply data from American Petroleum Institute set for release 4:30 p.m. EST.
DTN estimates U.S. crude stocks to have increased 2 million barrels (bbl) during the week of Nov. 8, while gasoline stocks are seen to have dropped 2 million bbl and distillate fuels to have decreased 700,000 bbl on the week.
At settlement, NYMEX December West Texas Intermediate futures climbed $0.32 to $57.12 per bbl ahead of Friday's expiration of September WTI options, with the January contract ended the session at $0.08-per-bbl premium. ICE January Brent futures gained $0.31 to settle at $62.37 bbl.
Product futures posted strong gains on the session, with December ULSD futures advancing 1.49 cents to end the trade at $1.9125 gallon, reversing off a 1 1/2-week low on the spot continuous chart. December RBOB futures rallied 2.21 cents to a $1.6365 gallon settlement.
The Energy Information Administration said in its monthly Short-term Energy Outlook released midafternoon Wednesday that gasoline consumption in the United States hit a seasonal record high in October, supported by strong gains in the labor market and sustained economic expansion.
Echoing this sentiment, Powell expressed confidence in the strength of the U.S. economy during his testimony Wednesday to the Joint Economic Committee. Powell noted that Fed's move toward monetary easing tends to have a lagged effect on the pace of economic growth.
"Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2% objective as most likely," said the Fed chairman.
The U.S. Federal Reserve lowered its short-term borrowing rates last month for the third time this year, to a range of 1.5% to 1.75%.
The U.S. economy grew at an annualized rate of 1.9% during the second quarter, while unemployment remained near a 50-year low.
U.S. EIA also upgraded its global oil demand forecast for both 2019 and 2020 after revising it lower for five consecutive months. In its latest monthly market outlook, agency boosted world's oil consumption by 150,000 barrels per day (bpd) in 2020 and up 80,000 bpd at 100.9 million bpd in the current year.
Agency sees a higher consumption rate from the industrialized nations within the Organization for Economic Cooperation and Development and countries outside the bloc.
"Some economic indicators improved compared with those of a few months ago. Manufacturing Purchasing Manager's Indexes (PMI) increased in both China and the United States," said EIA.
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