By Alex Kennedy / AP
Singapore: Oil prices rose for a second day Thursday in Asia, approaching $117 a barrel after US gasoline supplies fell more than expected in a weekly government report.
Light, sweet crude for September delivery rose 75 cents to $116.75 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract jumped $2.99 overnight to settle at $116.00 a barrel.
“It’s the first bright news for traders in the oil market in a while,” said Gavin Wendt, head of mining and resources research at Fat Prophets in Sydney. “The dramatic drop-off in commodities, and specifically oil, has been well overdone in my view.”
Before the stockpile report, September Nymex crude touched a low of $112.87 on Wednesday, more than $34 below its 11 July high of $147.27.
Later, in its weekly inventory report, the US Energy Department’s Energy Information Administration said gasoline supplies fell by 6.4 million barrels for the week ended 8 August, nearly three times more than the 2.2 million barrel drop expected by analysts surveyed by energy research firm Platts.
The EIA said crude stockpiles fell 400,000 barrels last week against analyst expectations of a 500,000 barrel increase. Inventories of distillate fuel, which include diesel and heating oil, decreased by 1.7 million barrels; analysts had expected distillate stocks to rise by 1.9 million barrels.
Mixing the picture, though, the EIA also said demand for gasoline over the four weeks ended 8 August was almost 2% lower than a year earlier, averaging 9.4 million barrels a day.
But Wendt, who expects oil prices to test $150 a barrel by the end of this year, said US investors have overestimated the impact a slowdown in the US economy will have on global demand for crude.
“They still think the US is the epicenter of the world economy,” Wendt said. “The US is still very important, but as far as commodity demand is concerned, the US isn’t the main game in town. China is the biggest consumer, and increasingly India.”
In other Nymex trading, heating oil futures rose 1.83 cents to $3.15 a gallon (3.8 liters) while gasoline prices gained 2.47 cents to $2.957 a gallon. Natural gas futures rose 8.6 cents to $8.542 per 1,000 cubic feet.
In London, Brent crude for September delivery rose 84 cents to $114.31 a barrel.