Oil jumps on shock slide in US crude stocks

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Oil jumps on shock slide in US crude stocks

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Oil prices rebounded Wednesday after a surprise slump in US crude stockpiles.

16 August,2012 07:30 am

Global oil prices rebounded Wednesday after a surprise slump in US crude stockpiles that indicated solid demand in the worlds biggest consumer.New Yorks main contract, West Texas Intermediate (WTI) light sweet crude for September, added 90 cents to $94.33 a barrel.Brent North Sea crude for delivery in September jumped $2.16 to $116.25.The US Energy Information Administration announced on Wednesday that American crude inventories plunged by 3.7 million barrels in the week to August 10.That was far heavier than market expectations for a drop of 1.9 million barrels, and signalled strengthening US demand.Oil prices are getting support from the latest inventory report from the US Energy Information Administration, noted GFT Markets analyst David Morrison.This showed that crude stockpiles fell more sharply than expected for the third consecutive week.To some extent, the report counters the expectation of moderating demand as global growth continues to slow. Yet US crude inventories are still above the upper limit of the average range for this time of year.The EIA added that gasoline or petrol inventories slid by 2.4 million barrels. Analysts had pencilled in a drop of 1.7 million.However, distillates -- which include diesel and heating fuel -- increased by 700,000 barrels. That confounded estimates for a 500,000-barrel decline.The market had risen on Tuesday, helped by US data showing a surge in consumer spending in July and eurozone growth data that came in line with expectations.Concerns about supply shortfalls arising from forthcoming maintenance in the North Sea also lent support, as did worries that violence in Syria could impact the oil-producing Middle East region.In recent days, oil has gained ground from mounting expectations of fresh stimulus measures from the European Central Bank, US Federal Reserve and Beijing, as the global economy falters.Crude is also finding support from the expectation of further central bank stimulus, added analyst Morrison.Concerns are growing over Greeces ability to meet the targets necessary to qualify for its next bailout tranche from the EU/IMF/ECB troika.Meanwhile, the problems in Spain appear as intractable as ever. This is raising the prospect that it will be the ECB rather than the US Federal Reserve who will be next to launch additional liquidity measures.