Oil jumps to fresh 6-month high as US inventories tumble

Oil jumps to fresh 6-month high as US inventories tumble

Singapore: Oil climbed to a six-month high above $84 for a second straight session after an industry report showed declines in US inventories across fuel categories, a sign chronic oversupply may subside at the world’s top user.

US crude for December gained 32 cents to $84.22 at 8:19am, after touching $84.50 earlier on Wednesday, the highest intraday price since 4 May. ICE Brent rose 23 cents to $85.64.

Expectations the Federal Reserve will on Wednesday announce a fresh round of expansionary monetary policy kept the dollar under pressure, helping commodity prices, while Republican gains in the US Congress lifted sentiment in Wall Street.

US crude inventories fell by 4.1 million barrels in the week to 29 October, the American Petroleum Institute (API) reported on Tuesday, before the Energy Information Administration (EIA) releases official statistics later on Wednesday. That compared with expectations for a 1.2 million barrel increase.

“Overall, it’s a bullish set of data, and sets a bullish outlook for the EIA," said Serene Lim, a Singapore-based oil analyst at ANZ. “It could be the beginning of the seasonal downward trend as we enter the winter season in the Northern Hemisphere."

Distillates stockpiles, including heating oil and diesel, fell 4.7 million barrels, more than four times the expected 1.1 million barrel draw in a Reuters survey, while gasoline supplies fell by 3.2 million barrels, against forecasts of little change.

Strikes at French refineries limited European exports of gasoline to the US, while west-to-east transatlantic distillates flows probably increased as shortages loomed because of the walkouts, analysts said.

Oil prices at $100 a barrel would be more comfortable for producing nations because of higher food prices and a weaker dollar, the top oil official for Opec member Libya said on Tuesday.

The Libyan comments came a day after Saudi Arabian oil minister Ali al-Naimi said oil prices in a $70-$90 range were comfortable for consumers, signaling a higher acceptable range from the $70-$80 range previously deemed comfortable.

Qatar’s oil minister also said $70-$90 per barrel would be reasonable for consumers and producers.

Euro-zone manufacturing picked up its pace last month, a business survey showed Tuesday, one day after better-than-expected US and Chinese factory data increased optimism about the global economy and revived risk appetite.

“What we are looking at is economic numbers improving, but how this translates into oil demand growth we may only see next year," Lim said. “At the moment, the well-supplied story is still standing and we don’t see demand growth outpacing supply growth until next year."

The US dollar stayed on the backfoot early in Asia on Wednesday, with the euro holding above $1.4000 and the Aussie just off parity as the Federal Reserve looked set to provide more stimulus to spur a flagging recovery.

World stocks neared a two-year high on Tuesday on stronger-than-expected economic data while the dollar fell as investors anticipated the US central bank will open the money spigot to spur the flagging US economy.

Republicans rolled up key early US election wins on Tuesday after a long and bitter campaign that could sweep Democrats from power in Congress and slam the brakes on President Barack Obama’s agenda.