Oil rises after surprise drop in U.S. inventories; stocks tick up

By Rodrigo Campos

NEW YORK (Reuters) - Crude oil prices rose to a 15-month high on Wednesday after a surprise U.S. inventory drawdown, boosting energy shares.

WTI crude hit its highest since July 2015 after the Energy Information Administration said U.S. stockpiles fell by 5.2 million barrels in the week ended Friday, dashing analysts' expectations for a build.

Stocks in the financial sector were boosted by Morgan Stanley's (NYSE:MS - News) better-than-expected quarterly profit, which rounds out a string of solid results from the largest U.S. banks.

"We do expect better earnings and we are encouraged by good financial earnings recently with strong fixed income trading," said Jeff Kravetz, regional investment director at the Private Client Reserve at U.S. Bank in Phoenix, Arizona.

"Overall it's looking to shape up to be a pretty good earnings season."

Energy stocks were boosted by the higher oil prices and helped offset a near 6-percent decline in shares of Intel after a disappointing revenue forecast.

"The severe weakness in energy prices really took a toll. We've had a few starts up only to see prices fall, but this time it seems different, the price holding for longer and investors are warming to the sector," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

"Better energy prices are seen as a statement that maybe the economy is a little bit stronger," he said.

The Dow Jones industrial average (.DJI) rose 72.11 points, or 0.4 percent, to 18,234.05, the S&P 500 (.SPX) gained 7.63 points, or 0.36 percent, to 2,147.23 and the Nasdaq Composite (.IXIC) added 8.17 points, or 0.16 percent, to 5,252.01.

The S&P 500 energy sector (.SPNY) rose 1.7 percent.

The pan-European STOXX 600 (.STOXX) index rose 0.3 percent, following a 1.5 percent rise in the previous session. MSCI's gauge of stocks world wide (.MIWD00000PUS) rose 0.4 percent.

U.S. crude was up 2.2 percent at $51.39 a barrel and Brent last traded at $52.48, up 1.6 percent on the day.

RECORD SAUDI BOND SALE

Saudi Arabia sold $17.5 billion of debt, the largest ever emerging market bond sale in the government's first international offer that attracted investor orders for almost four times that amount.

The launch of the offering briefly drove Treasury yields higher but benchmark 10-year notes were last little changed, down 1/32 in price to yield 1.7503 percent, up from 1.748 percent on Tuesday.

The U.S. dollar index (.DXY) was little changed at 97.907, not far from the seven-month high of 98.169 hit Monday.

The euro was 0.1 percent lower versus the U.S. dollar at $1.0963 .

Spot gold gained 0.5 percent to $1,268.90 an ounce, after earlier touching its highest since Oct. 5 at $1,273.34. U.S. gold futures rose 0.6 percent to $1,269.80 an ounce.

(Reporting by Rodrigo Campos, additional reporting by Richard Leong and Chuck Mikolajczak; Editing by Nick Zieminski)