NEW YORK, Jan. 31 -- Crude prices rose on Wednesday as bigger-than-expected improvement of European economic sentiment offset the effect of downbeat U.S. economic growth data and huge increase in U.S. oil inventories.
The European Commission's economic sentiment index rose for the third month to 89.2 points in January, better than market expectations of an improvement to 88.2. It spurred optimism for the region's economic recovery and offered great supports to crude oil prices.
Besides, the meeting announcement of the Federal Reserve also added to the boosting tone. After two-day meeting, the U.S. central bank said on Wednesday it would continue its bond buying at a pace of 85 billion dollars per month, and hold interest rates near zero until unemployment falls to at least 6.5 percent.
Meanwhile, payroll processing firm ADP said the U.S. private sector added 192,000 jobs in January, beating expectation, showing continuing improvement in the world largest economy's job market.
But the worse-than-expected U.S. economic growth rate for the fourth quarter weighed and limited the crude gains. According to the first estimates of the Commerce Department, U.S. GDP surprisingly contracted 0.1 percent annual rate in the last quarter of 2012, far below the market expectation of 1.0 percent of growth.
To add to pressure, the U.S. oil inventories increased sharply by 5.9 million barrels in the week ended Jan. 25 due to a rise in import. This was the largest weekly build since mid-October.
Light, sweet crude for March delivery gained 37 cents, or 0.38 percent to settle at 97.94 dollars a barrel on the New York Mercantile Exchange.
Brent crude for March delivery rose 54 cents, or 0.47 percent to finish at a three-month high of 114.90 dollars a barrel.