BLBG: Crude Futures Extend Gains After Inventories Decline Most in a Decade
Oil rose for a third day as inventories declined the most in a decade.
Futures gained as much as 2.1 percent after the Energy Department reported supplies fell 10.6 million barrels to 323.6 million last week. It was the largest decline in barrels since Feb. 16, 2001, and almost five times the size of the 2.13 million-barrel drop predicted by the median of 12 analysts in a Bloomberg News survey.
“This is a shocker and is going to be bullish for oil,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “This is definitely going to get some of the bears scared out of the market in the short term.”
Crude oil for February delivery rose $1.11, or 1.1 percent, to $98.35 a barrel at 11:22 a.m. on the New York Mercantile Exchange. Oil traded at $98.17 a barrel before the release of the report at 10:30 a.m. in Washington, then jumped to $99.25 before slipping.
Brent oil for February settlement increased 60 cents, or 0.6 percent, to $107.33 on the London-based ICE Futures Europe exchange.
“Refiners are trying to reduce inventories to minimize their ad valorem taxes” in Texas, Andy Lipow, president of Lipow Oil Associates LLC in Houston, said in a telephone interview before the report. “This is accomplished by increasing exports of product and minimizing imports of crude oil to reduce inventories.”
Gasoline, Distillates
Gasoline inventories slid 412,000 barrels to 218.4 million. Distillate fuels, which include diesel and heating oil, dropped 2.35 million barrels to 139.1 million.
Total petroleum demand increased 5 percent to 19.3 million barrels a day. Demand for distillates gained 447,000 barrels a day to 4.4 million, the highest level since August 2008.
Oil also gained after European Central Bank said it will lend euro-area banks a record amount for three years. The Frankfurt-based ECB awarded 489 billion euros ($645 billion) in 1,134-day loans today, the most ever in a single operation.
The lending is more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark interest rate -- currently 1 percent -- over the period of the loans.
The Obama administration and European Union governments are seeking help from Arab and Asian allies to reduce Iran’s oil revenues.
EU nations, the U.S. and Asia-Pacific allies discussed possible measures in Rome yesterday and agreed to increase pressure on Iran, the world’s No. 3 crude exporter in 2010, to abandon its suspected nuclear weapons program, according to an Italian Foreign Ministry statement.
To contact the reporter on this story: Moming Zhou in New York at Mzhou29@bloomberg.net;
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
