Business | Oil & Gas
Oil rises above $111 as US stockpiles decline
Oil jumped to more than $111 a barrel on Wednesday, within sight of a record high, after a US government report showed a surprise drop in inventories in the world's top fuel consumer.
- Reuters
- Published: 00:28 April 10, 2008
London: Oil jumped to more than $111 a barrel on Wednesday, within sight of a record high, after a US government report showed a surprise drop in inventories in the world's top fuel consumer.
US crude oil stockpiles fell by 3.2 million barrels in the week to April 4 as imports declined, the US Energy Information Administration said. Analysts expected a 2.2 million-barrel increase in stocks.
"It's bullish across the board. A very low crude import number got us a surprise draw there," said Tim Evans, analyst at Citigroup Futures Research. "Imports are running behind year-ago levels."
US crude was up $2.50 to $111 a barrel by 1507 GMT, nearing the record high of $111.80 hit on March 17. London Brent hit a record $108.77 and later pared gains to $108.10.
As well as the drop in crude stockpiles, the US inventory report also showed larger-than-expected declines in stocks of distillates and gasoline.
Concern about diesel supply given strong demand in Europe and Asia also supported crude. London gas oil also hit a record high of $1,026.75 a tonne yesterday.
A Reuters poll on stocks data due out later in the day showed an average forecast for a 1.4 million barrel decline in distillate stocks (including heating oil and diesel) and a 2.5 million barrel drop in gasoline stocks.
Concerns over diesel supply, particularly with strong demand in Europe and Asia saw London's gas oil futures, closely related to diesel, hit a new peak of $1,017 a tonne on Tuesday.
The April contract stood at $1,003 a tonne by 1148 GMT.
Putting a cap on bullish expectations for products data, crude stocks are seen rising by 2.2 million barrels, as refiners imported more in a bid to raise feedstock supply for the coming driving season.
The US Energy Information Administration (EIA) has said US gasoline demand is likely to contract this summer for the first time since 1991 - a reflection of high prices and economic weakness in the world's biggest consumer.
But it also raised its full-year forecast for US light crude to more than $100 a barrel for the first time and said a slowing US economy would not be enough to check soaring oil demand.
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