Oil up above $77 on US crude stock drop, weak dollar

Oil up above $77 on US crude stock drop, weak dollar
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First Published: Thu, Dec 24 2009. 09 26 AM IST
Updated: Thu, Dec 24 2009. 09 26 AM IST
Singapore: Oil rose above $77 on Thursday, after surging more than 3% the previous day, boosted by the weaker dollar and a deeper-than-forecast drop in crude and fuel stocks in the world’s top energy consumer.
The dollar’s recent rally stalled following news of a surprise drop in US home sales that dampened optimism about the economy, holding the currency below a three-month high against the euro and two-month high on the yen.
US crude for February delivery rose 65 cents at $77.32 a barrel by 9:10am, the highest since 4 December, after settling up $2.27 on Wednesday. The contract has gained about $7 since 14 December, when it hit a near 2-month low.
London Brent crude for February rose 76 cents to $76.21.
“Before the Christmas and holiday season by the end of last week, momentum of the crude oil market was quite bearish and the market has been a little bid oversold,” said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
“But the EIA data were much more positive than the market had expected, so many factors are now quite bullish,” he said. “I think the market is heading towards the upside, probably will hold the level by the end of the year.”
US commercial crude oil stockpiles fell 4.9 million barrels to 327.5 million barrels last week, inventory data from the Energy Information Administration (EIA) showed, far exceeding the 900,000-barrel drop forecast by analysts.
Lower imports into the US and year-end drawdowns in crude stocks for tax purposes were the main reasons for the decline, analysts said. Distillate stocks fell a larger-than-expected 3.1 million barrels, while gasoline showed a surprise drop of 900,000 barrels.
DRAWDOWNS ELSEWHERE
“Gasoline and gas oil inventories held in independent storage in Europe’s oil hub also fell over the past week on increased demand ahead of the holidays,” Dutch oil analyst Pieter Kulsen said on Wednesday.
Gas oil inventories stored in independent tanks in Amsterdam-Rotterdam-Antwerp eased to 2.873 million tonnes as of Wednesday, down for the first time since the week to 26 November.
And in Japan, the world’s third-largest oil user, commercial crude stocks dipped by 27,000 kilolitres to 15.07 million kl last week, after hitting their highest level in two months the previous week. Crude stocks were below their year-ago level as refiners keep low inventories due to falling demand.
Oil also rallied as the dollar took a pause from its recent run-up, with the dollar index versus a currency basket hovering under this week’s three-month high, as trading activity wound down before Christmas.
Oil has often risen this year when the dollar softens, making crude more affordable for holders of other currencies.
The focus will now be on weekly US jobless claims later on Thursday as investors and traders try to assess whether a recent improvement in monthly payrolls is likely to be sustained and what that means for the timing of US interest rate increases.
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First Published: Thu, Dec 24 2009. 09 26 AM IST
More Topics: Oil | Crude | Fuel stocks | Dollar | Astmax Co Ltd |