Oil prices rise above $76 on inventory drop
The Energy Information Administration (EIA) reported a drop of 4.9 million barrels in crude stocks, more than double the two million barrel decrease analysts expected, according to a consensus estimate collected by energy information provider Platts.
Crude oil rose for a second day in New York as positive housing and fuel-inventory data signaled a recovery in the U.S., the world’s largest energy user.
“The psychology has changed significantly,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “There are increasing signs of recovery in the key market, the U.S.”
Oil, which lost 54 per cent in 2008, has gained 68 per cent this year on speculation global demand for fuels will increase with the economic rebound.
Yesterday’s existing-homes sales figure rate exceeded the highest estimate from economists surveyed by Bloomberg News. The Commerce Department is expected to report today November sales of new homes also increased.
Commercially held crude oil inventories in the U.S. fell 3.71 million barrels last week to 328.8 million, said the industry-funded American Petroleum Institute. Gasoline stockpiles declined 1.1 million barrels to 215.9 million, the biggest drop in 10 weeks. Distillate fuel supplies, which include heating oil and diesel, slipped 745,000 barrels to 165.1 million, the API said.
U.S. gasoline demand rose the most in three weeks as drivers in the northeast filled up before a snowstorm, according to MasterCard Inc., the second-biggest credit card company.
Motorists bought an average 9.57 million barrels a day of gasoline in the week to December 18, MasterCard said yesterday in its SpendingPulse report. Consumption increased 2.9 per cent from the previous week and 1.7 per cent from a year earlier.
OPEC agreed at a meeting on Tuesday in Luanda, Angola, to hold production quotas at 24.845 million barrels a day. The 12-member group, which pumps about 40 per cent of the world’s oil, has gathered four times this year without revising official output targets.
Rising oil prices have encouraged some OPEC members to renege on their pledge in 2008 to reduce supply by 4.2 million barrels a day. Secretary-General Abdalla el-Badri said he wants quota compliance to improve to between 75 per cent and 80 per cent from the current level of about 60 per cent.
“No change in quotas was largely expected by the market,” said Kaha Kiknavelidze, a managing partner at London-based Rioni Capital Partners LLP, a hedge fund that specializes in emerging markets. “More important is compliance, which has deteriorated meaningfully. That puts pressure on prices.”
Brent crude oil price for February settlement rose as much as 46 cents, or 0.6 per cent, to $73.92 a barrel on the London-based ICE Futures Europe exchange. The contract was at $73.90 at 4:07 p.m. Singapore time. Yesterday, it advanced 47 cents, or 0.6 per cent, to settle at $73.46 a barrel.