By Carla Mozee, MarketWatch
MADRID (MarketWatch) — U.S. benchmark crude-oil futures surged above a level not seen in more than a year on Wednesday after weekly U.S. crude-oil supplies fell by more than twice the amount anticipated by analysts.
Doubling gains seen from Asian trading hours, crude oil for August delivery CLQ3 +1.78% jumped $1.62, or 1.6% to $105.15 a barrel in electronic trade.
Oil has not traded above $105 a barrel since May 2012. And August Brent oil UK:LCOQ3 +0.64% rose 42 cents, or 0.4%, to $108.25 a barrel on ICE Futures, levels not seen since April.
The surge in oil prices came after the American Petroleum Institute late Tuesday said crude supplies fell 9 million barrels for the week ended July 5. A Platts survey of analysts had projected a decline of 3.8 million barrels.
“This is a big shock,” said Price Futures Group senior market analyst Phil Flynn. “While most were looking at another drawdown in supply, no one expected this drop.”
The trade group’s data came ahead of the more closely watched EIA report due at 10:30 a.m. U.S. Eastern time Wednesday. U.S. oil inventory this year had hit record levels, according to the EIA, stoking concerns about lackluster demand.
Also set for assessment on Wednesday will be a monthly oil-market report from the Organization of Petroleum Exporting Countries and minutes from the U.S. Federal Reserve’s most recent interest-rate meeting. Also, Fed Chairman Ben Bernanke was slated to speak to an audience of economists in Boston.
Earlier Wednesday, prices had held onto gains following the release of weak trade data from China, including a 1.4% drop in first-half oil imports.
On Tuesday, the International Monetary Fund cut its 2013 and 2014 forecasts for world economic growth, putting a dent in energy-demand prospects. But worries about potential disruption in the Middle East oil sector buoyed oil prices, leaving them higher on the New York Mercantile Exchange by 39 cents at $103.53 a barrel. The settlement was the highest in 14 months.
At least 51 people have died in clashes between Egyptian security forces and supporters of Mohammed Morsi, who last week was ousted as Egypt’s president. Oil prices have topped $100 a barrel and have gained more than 2% since Morsi’s removal from office.
Egypt isn’t a major oil producer, but the deadly violence has raised concerns about supply disruptions at the Suez Canal and the Suez-Mediterranean pipeline, a key hub for oil producers controlled by Egypt.
Egypt’s interim leadership on Tuesday put forth a timetable for making changes to the country’s constitution and holding new elections, but the plan has been rejected by rival groups. The National Salvation Front, the main liberal opposition group, has demanded more changes and consultation on that plan, the BBC reported Wednesday.
The situation in Egypt “remains fluid,” Wells Fargo Advisers international strategist Sameer Samana told clients this week. “While investors may be tempted to chase performance in the energy markets, we recommend holding exposure as part of broad commodity positions, as a positive resolution may lead to a pullback in oil.”
August gasoline RBQ3 +1.45% rose 5 cents, or 1.6%, to $2.97 a gallon, and August heating oil HOQ3 +0.47% rose 1 cent to nearly $3 a gallon.
August natural gas NGQ13 +1.75% rose 6 cents, or 1.6%, to $3.72 per million British thermal units.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
