Crude oil climbed after a report showed that U.S. stockpiles declined to an eight-month low as refineries unexpectedly increased operating rates. Futures rose as much as 1.2 percent after the Energy Department said supplies fell 7.34 million barrels to 339 million last week. It left inventories at the lowest level since January and was the biggest drop since December. Refineries operated at 88.3 percent of capacity, up 1.3 percentage points from the prior week. “The inventory number was a lot bigger than anyone expected,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “Prices would be a lot higher if the drop was taking place at a time when expectations about the U.S. and global economies weren’t being lowered.” Crude oil for November delivery rose 68 cents, or 0.8 percent, to $87.60 a barrel at 12:04 p.m. on the New York Mercantile Exchange. Futures have increased 19 percent over the past year. Oil traded at $86.14 a barrel before release of the inventory report at 10:30 a.m. in Washington. Brent oil for November settlement rose $1.58, or 1.4 percent, to $112.12 a barrel on the London-based ICE Futures Europe Exchange. Inventories of crude oil were projected to decline 1.3 million barrels, according to the median of 15 analyst responses in a Bloomberg News survey. ‘Surprised Everybody’ “That big drop in crude oil just surprised everybody,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “Crude went from $86 to $88 in the aftermath of the stock draw. U.S. crude oil production surged 13 percent to 5.75 million barrels a day last week, the highest level since 2003, the report showed. Supplies of distillate fuel, a category that includes heating oil and diesel, declined 874,000 barrels to 157.6 million in the week ended Sept. 16, the Energy Department report shows. They were forecast to increase 1 million barrels, according to the analysts surveyed by Bloomberg News. Gasoline inventories surged 3.3 million barrels to 214.1 million barrels last week, the biggest one-week gain since May and the highest level since July, the report showed. Analysts estimated that supplies would increase 1.35 million barrels. Imports of crude oil dropped 2.2 percent to 8.35 million barrels a day last week, the lowest level since April, the report showed. Fuel imports rose 9 percent to 2.1 million barrels a day. ‘Knee-Jerk Reaction’ “We’re getting a knee-jerk reaction to the weekly data,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Imports fell last week and refinery operating rates picked up, so there is an explanation for much of the drop. There’s no evidence that there is a global shortage of supply.” The International Monetary Fund yesterday cut its global growth forecast and predicted “severe” repercussions if policy makers fail to stem the debt turmoil that’s threatening to engulf Italy and Spain. Bank recapitalization, through public injections if necessary, should come in addition to “credible” strategies by governments to reduce their public debt, the IMF said today. The Federal Reserve is scheduled to issue its policy statement at about 2:15 p.m. in Washington. Republican lawmakers urged Fed Chairman Ben S. Bernanke to refrain from additional monetary easing to avoid “further harm” to the U.S. economy, saying Americans have reason to be “skeptical” of his plans. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

Source