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Oil rises on signs of better demand, weaker dollar
Source: Agencies |
August 18, 2011, Thursday
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OIL rose yesterday as traders focused on an unexpectedly large drop in US gasoline stockpiles and a weaker dollar.
Benchmark West Texas Intermediate crude for September delivery rose 93 cents to finish at US$87.58 per barrel on the New York Mercantile Exchange.
Brent crude, which is used to price many international oil varieties, increased by US$1.47 to end the day at US$110.60 per barrel on the ICE Futures exchange in London.
Oil rose early in the day on reports that the nation's gasoline supply dropped more than expected last week. The Energy Information Administration said gasoline supplies fell by 3.5 million barrels last week to 210.1 million barrels. Analysts expected a drop of 2.3 million barrels, according to Platts, the energy-information arm of McGraw Hill Cos.
PFGBest analyst Phil Flynn said the drop in gasoline supplies is a promising sign for the economy. "It suggests that demand for gasoline is improving a little bit," Flynn said.
Increasing demand for gasoline would suggest that refineries will also need more oil, which is used to make gasoline.
EIA said that crude supplies increased by 4.2 million barrels last week. When the amount of oil that was pumped out of the Strategic Petroleum Reserve last week is included, the country's overall oil supply actually dropped by 1.7 million barrels. The US is contributing about half of the 60 million barrels that the International Energy Agency said it would release to help cover shortfalls of Libyan crude on international markets. Oil supplies from Libya are shut down because of unrest there.
Oil rose yesterday as the dollar lost ground to major currencies in countries that have higher interest rates than the US Oil, which is priced in dollars, tends to rise as a falling greenback makes crude cheaper for investors holding foreign money.
In other Nymex trading for September contracts, heating oil rose 2.9 cents to settle at US$2.9616 per gallon and gasoline futures increased by 1.65 cents to settle at US$2.8703 per gallon. Natural gas rose less than a penny to settle at US$3.933 per 1,000 cubic feet.
Benchmark West Texas Intermediate crude for September delivery rose 93 cents to finish at US$87.58 per barrel on the New York Mercantile Exchange.
Brent crude, which is used to price many international oil varieties, increased by US$1.47 to end the day at US$110.60 per barrel on the ICE Futures exchange in London.
Oil rose early in the day on reports that the nation's gasoline supply dropped more than expected last week. The Energy Information Administration said gasoline supplies fell by 3.5 million barrels last week to 210.1 million barrels. Analysts expected a drop of 2.3 million barrels, according to Platts, the energy-information arm of McGraw Hill Cos.
PFGBest analyst Phil Flynn said the drop in gasoline supplies is a promising sign for the economy. "It suggests that demand for gasoline is improving a little bit," Flynn said.
Increasing demand for gasoline would suggest that refineries will also need more oil, which is used to make gasoline.
EIA said that crude supplies increased by 4.2 million barrels last week. When the amount of oil that was pumped out of the Strategic Petroleum Reserve last week is included, the country's overall oil supply actually dropped by 1.7 million barrels. The US is contributing about half of the 60 million barrels that the International Energy Agency said it would release to help cover shortfalls of Libyan crude on international markets. Oil supplies from Libya are shut down because of unrest there.
Oil rose yesterday as the dollar lost ground to major currencies in countries that have higher interest rates than the US Oil, which is priced in dollars, tends to rise as a falling greenback makes crude cheaper for investors holding foreign money.
In other Nymex trading for September contracts, heating oil rose 2.9 cents to settle at US$2.9616 per gallon and gasoline futures increased by 1.65 cents to settle at US$2.8703 per gallon. Natural gas rose less than a penny to settle at US$3.933 per 1,000 cubic feet.
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