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Oil prices jump on surprise drawdown of US stocks
Source: Agencies |
August 20, 2009, Thursday
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OIL prices spiked yesterday after the government reported a huge draw of crude oil from U.S. stockpiles.
The report was surprising because the demand for energy has been knocked down so badly by the recession. Crude withdrawn from storage facilities last week wiped out a buildup in supplies over the past two weeks.
Benchmark crude for September delivery jumped US$3.23 to settle at US$72.42 a barrel on the New York Mercantile Exchange. That contract expires Thursday, and most of the trading has already shifted to the October contract, which climbed US$2.74 to settle at US$73.83.
If the October contract ends the week at that price, it would set a new high for 2009.
The Energy Information Administration said crude in storage fell by 8.4 million barrels last week. Gasoline held in storage fell as well.
Investors have been looking for signs that the country would recover its energy appetite as the economy healed. The EIA report, on the surface, would suggest that may have begun. Last week's drop in crude supplies was the most since Aug. 15, 2008, a month after crude prices peaked above US$147 a barrel.
Yet it may be too soon to say that consumers and businesses are using more energy. For one, crude imports over the past four weeks are down 9.5 percent compared with the same period last year.
"They didn't import more because, at the end of the day, we just don't need it," analyst Stephen Schork said.
Many analysts say there is no evidence that consumers are driving and flying more, or that big industrial power users are ramping up operations.
The amount of jet fuel, gasoline, diesel and crude in storage is still huge, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
"It would take several reports like this to convince me" that demand has returned, Kloza said.
Meanwhile, Hurricane Bill grew to a Category 4 storm, but forecasters said it would steer clear of petroleum refiners in the Gulf Coast. Bill is sweeping up the Atlantic, about 460 miles (740 kilometers) east of the Leeward Islands, and could effect travel in the U.S.
In other Nymex trading, gasoline for September delivery climbed 3.44 cents to settle at US$2.0346 a gallon and heating oil added 5.37 cents to settle at US$1.9187. Natural gas for September delivery increased 2.3 cents to settle at US$3.119 per 1,000 cubic feet.
In London, Brent prices increased US$2.22 to settle at US$74.59 a barrel on the ICE Futures exchange.
The report was surprising because the demand for energy has been knocked down so badly by the recession. Crude withdrawn from storage facilities last week wiped out a buildup in supplies over the past two weeks.
Benchmark crude for September delivery jumped US$3.23 to settle at US$72.42 a barrel on the New York Mercantile Exchange. That contract expires Thursday, and most of the trading has already shifted to the October contract, which climbed US$2.74 to settle at US$73.83.
If the October contract ends the week at that price, it would set a new high for 2009.
The Energy Information Administration said crude in storage fell by 8.4 million barrels last week. Gasoline held in storage fell as well.
Investors have been looking for signs that the country would recover its energy appetite as the economy healed. The EIA report, on the surface, would suggest that may have begun. Last week's drop in crude supplies was the most since Aug. 15, 2008, a month after crude prices peaked above US$147 a barrel.
Yet it may be too soon to say that consumers and businesses are using more energy. For one, crude imports over the past four weeks are down 9.5 percent compared with the same period last year.
"They didn't import more because, at the end of the day, we just don't need it," analyst Stephen Schork said.
Many analysts say there is no evidence that consumers are driving and flying more, or that big industrial power users are ramping up operations.
The amount of jet fuel, gasoline, diesel and crude in storage is still huge, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
"It would take several reports like this to convince me" that demand has returned, Kloza said.
Meanwhile, Hurricane Bill grew to a Category 4 storm, but forecasters said it would steer clear of petroleum refiners in the Gulf Coast. Bill is sweeping up the Atlantic, about 460 miles (740 kilometers) east of the Leeward Islands, and could effect travel in the U.S.
In other Nymex trading, gasoline for September delivery climbed 3.44 cents to settle at US$2.0346 a gallon and heating oil added 5.37 cents to settle at US$1.9187. Natural gas for September delivery increased 2.3 cents to settle at US$3.119 per 1,000 cubic feet.
In London, Brent prices increased US$2.22 to settle at US$74.59 a barrel on the ICE Futures exchange.
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