Oil surges after US government data shows shock decline in crude stocks

Oil surges after US government data shows shock decline in crude stocks

	Published : Wed, 31 Oct 2007 16:11 By : Agencies Print this Story

LONDON (Thomson Financial) - Oil surged after weekly US government data showed a shock fall in crude stocks ahead of the peak demand northern hemisphere winter.

The Energy Information Administration said in the week to Oct 26, crude stocks fell by 3.9 mln barrels, leaving them 7.5 pct below last year's levels. Analysts were expecting stocks to rise by 0.1 mln barrels.

The decline in stocks came despite a fall in demand for crude - in the form of a 13,000 bpd weekly drop in crude oil refinery inputs - and a 278,000 bpd weekly increase in crude imports.

'The market is clearly reacting to the larger than expected 3.9 mln barrel drop in crude oil inventories, including a stunning 3.1 mln barrel drop at the Cushing, Oklahoma delivery point for the NYMEX WTI futures,' said Tim Evans, analyst at Citigroup.

He added, however, that the increase in product stocks 'were most definitely bearish for oil'.

The EIA data showed stocks of distillates, which include the key winter heating oil fuel, rose by 0.8 mln barrels last week, while gasoline stocks climbed 1.3 mln barrels.

All the same, the market is for now focused on the shock decline in crude stocks, which follows a 5.3 mln barrel crude stock decline reported in last week's data.

That decline helped spark the current rally in crude that took prices up to an all time record of 93.80 usd a barrel in New York and 90.49 usd in London on Monday.

At 3.07 pm, London's benchmark Brent crude contract for December delivery were up 2.39 usd at 89.83 usd per barrel. Meanwhile, New York crude contract for December delivery jumped 2.40 usd to 92.80 usd per barrel. Both contracts are now approaching their all time record highs again.

maytaal.angel@thomson.com

ma/jag

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