Crude oil rose to a one-month high after an Energy Department report showed that U.S. inventories fell more than expected.
Stockpiles declined 3.3 million barrels to 293.6 million, the lowest since January 2005, the report showed. Supplies were expected to drop 1.5 million barrels, according to the median of responses by 12 analysts in a Bloomberg News survey. Prices rose earlier because of the assassination of Benazir Bhutto, Pakistan's former prime minister.
These numbers were bullish across the board, said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. You have to add some geopolitical premium because of the news from Pakistan. It's clear we are off to the races and will probably test the record tomorrow.
Crude oil for February delivery rose $1.36, or 1.4 percent, to $97.33 a barrel at 11:09 a.m. on the New York Mercantile Exchange. Oil reached $97.50 today, the highest since Nov. 26. Futures touched a record $99.29 on Nov. 21. Prices are up 61 percent from a year ago.
Brent crude for February settlement rose $1.37, or 1.5 percent, to $95.31 a barrel on London's ICE Futures Europe exchange. Prices reached $95.35, the highest since Nov. 26.
The department released its weekly report on inventories at 10:30 a.m. in Washington, a day later than usual because of Christmas.
The combination of bullish inventory numbers and thin volume is sending prices higher, said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta. There are a lot of people who would love to see prices reach the magical triple digit level before the end of the year. The bias has to be higher until the year ends.
Lower Volume
Trading volumes have been lower than usual because of end- of-year holidays. Nymex oil traders exchanged an estimated 241,452 contracts yesterday, down 31 percent from a week earlier, according to data compiled by Bloomberg.
Total implied fuel demand in the U.S. averaged 21.1 million barrels a day in the four weeks ended Dec. 21, up 1.6 percent from a year earlier, according to the department. Consumption of distillate fuel, a category that includes heating oil and diesel, averaged 4.5 million barrels a day over the period, up 5.7 percent from a year earlier.
The department measures shipments from refineries, pipelines and terminals to calculate demand.
Terrorism
The oil market has been sensitive to suspected Islamic terror assaults since the Sept. 11, 2001, attacks on the U.S. Pakistan borders Iran, which holds the world's second-biggest oil reserves, and is located along the Arabian Sea, where tankers travel before entering the Persian Gulf.
The U.S. backed a partnership between Bhutto and President Pervez Musharraf. President George W. Bush banked on the relationship to return stability to a nuclear-armed country that, according to U.S. intelligence reports and officials, is failing to combat a growing Islamist threat.
Bhutto received a letter from friends of al-Qaeda on Oct. 23, threatening more suicide attacks, possibly using women bombers, her lawyer, Farooq Naik, said.
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Thursday, December 27, 2007
Crude Oil Rises to a One-Month High After U.S. Inventory Drop
Posted by Srivatsan at 9:35 AM
Labels: U.S. economy, US Markets
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