Oil Prices Surge on US Oil Inventories Drop and Bernanke's Easing Comments

Strategic Insights -

Oil futures finished higher on Wednesday, driven by data showing a significant drop in US oil inventories and comments from Federal Reserve Chairman Ben Bernanke suggesting the possibility of further easing. The drop in oil inventories, reported by the Energy Information Administration, was greater than expected, leading to a surge in oil prices. Meanwhile, Bernanke's comments kept the door open to restarting the central bank's stimulus program, which has been tied to a weakening dollar and higher oil prices.

Key Takeaways:

  • Crude oil futures settled up 62 cents, or 0.6%, to $98.05 a barrel on the New York Mercantile Exchange, while Brent crude oil on the ICE futures exchange rose 78 cents, or 0.7%, to $118.53 a barrel.
  • The Energy Information Administration reported a greater-than-expected drop in US oil inventories, with crude oil stockpiles falling by 3.1 million barrels.
  • Analysts had expected oil stocks to fall by 1.3 million barrels, gasoline stocks to increase by 100,000 barrels, and distillate stocks to rise by 200,000 barrels.
  • Gasoline demand was reported as the lowest since 2003, while distillate demand was at a 20-month low last week.
  • The prospect of additional easing by the Federal Reserve, as suggested by Bernanke, kept oil prices under pressure, with many traders expecting a weaker dollar to boost oil prices.

Statistics:

  • Crude oil futures rose by 62 cents, or 0.6%, to $98.05 a barrel on the New York Mercantile Exchange.
  • Brent crude oil on the ICE futures exchange rose by 78 cents, or 0.7%, to $118.53 a barrel.
  • The Energy Information Administration reported an unexpected drop in US oil inventories, with a decrease of 3.1 million barrels.
  • Gasoline demand was the lowest since 2003, while distillate demand was at a 20-month low last week.
  • The ICE Dollar Index was recently down 1% at 75.210, leading to a boost in oil prices due to a weaker dollar.

Sources:

  • (Dow Jones Commodities News via Comtex) --
  • Dow Jones Newswires; (dan.strumpf@dowjones.com)