Oil prices dropped today ahead of a report that may show a drawdown in US crude inventories.
Later this afternoon, the Department of Energy will release its closely watched weekly inventories data, which, according to a Bloomberg News survey, could revealed a one million barrels drop in America’s crude stocks.
The American Petroleum Institute (API) yesterday said US inventories shed a massive 11.6 million barrels in the week to July 29, marking the biggest weekly drop in nearly five years.
Demand for crude oil futures and other assets that are perceived as risky got a boost from yesterday’s payrolls report from ADP and optimism ahead of this week’s policy announcements from the Federal Reserve and the European Central bank (ECB).
Payrolls processor ADP estimated that the private sector in the US added 163,000 jobs last month, topping forecasts of an increase of just over 100,000.
On Friday, the Department of Labor will release its closely followed non-farm payrolls report for July.
Analysts polled by Bloomberg projected a gain of 110,000, while the unemployment rate is expected to hold steady at 8.2 percent.
In the meantime, the Federal Reserve will make a policy announcement following the conclusion of its two day meeting later today.
It is unlikely that the Fed will launch a third round of quantitative easing to bolster the recovery with analysts expecting policymakers to pledge to keep interest rates at ultra low levels beyond 2014.
Tomorrow, the European Central Bank (ECB) will hold a policy meeting. Traders hope that the central bank will announce further stimulus measures after ECB p[resident Mario Draghi said last week that it would do all that’s necessary to save the euro.
US light, sweet crude for September delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), rose 37 cents to US$88.43/barrel this afternoon.
September Brent crude rallied 87 cents to US$105.79/barrel on the ICE Exchange.
Today’s top risers in the oil and gas sector were:
Falkland Oil & Gas (LON:FOGL), up 8 percent at 77.05 pence at midday
Genel Energy (LON:GENL), up 6.5 percent at 682.5 pence
Bayfield Energy (LON:BEH), up 5.5 percent at 17.35 pence
Desire Petroleum (LON:DES), up 5 percent at 21 pence
The top fallers were:
Petro Matad (LON:MATD), down 3 percent at 7.5 pence at midday
Petroceltic International (LON:PCI), down 3 percent at 7.8 pence
Gasol (LON:GAS), down 2.5 percent at 0.52 pence
