Crude oil futures edged higher Wednesday as positive US service sector data and the G7 leaders' pledge to tackle economic problems provided some relief to the markets.
Light sweet crude for July delivery gained 1.12 percent to $85.25 a barrel in electronic trading on the New York Mercantile Exchange during European trading hours. Brent crude oil futures for July delivery rose 0.73 percent to $99.57 a barrel on the ICE futures exchange in London.
The non-manufacturing sector in the US unexpectedly picked up steam in May, easing concerns over global economic conditions for the time being. The Institute for Supply Management's (ISM) non-manufacturing purchasing managers index (PMI) came in at 53.7 in May compared to 53.5 in April.
In an emergency teleconference Tuesday, financial chiefs from the Group of Seven nations agreed to work jointly to sort out the debt crisis in Spain and Greece. However, they provided no guidance on how to do so.
Meanwhile, the drop in the US crude stockpiles also lent support to oil prices. The American Petroleum Institute said Tuesday that crude inventories declined to 1.8 million barrels last week.
Market participants are likely to focus on European Central Bank's (ECB) meeting later in the day to see whether the bank will announce easing measures to calm market jitters over the current euro zone crisis.
We expect the ECB to cut its Refi rate by 25bp at its meeting today. At the same time, we look for the ECB to announce the extension of the fixed-rate, full allotment regime until beyond the end of the year, for all refinancing operations, said a note from Credit Agricole.
The US Energy Information Administration will report weekly inventory data after the markets open Wednesday.