MW: Oil back above $93 as supplies drop unexpectedly
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Crude-oil futures climbed back above $93 a barrel on Wednesday, after data showed oil supplies unexpectedly fell last week.
Hopes that the U.S. Federal Reserve will maintain its accommodative policy stance further provided support.
Crude oil for April delivery CLJ3 +1.00% rose 88 cents, or 1%, to $93.41 a barrel, partly regaining a $1.58 loss from Tuesday. The sharp loss in the prior session was triggered by uncertainty surrounding a bailout plan for Cyprus, as Cypriot lawmakers rejected a controversial levy on bank deposits as part of the rescue deal.
The April contract expires after the Nymex close on Wednesday.
The gains for oil came as a report from the American Petroleum Institute released late Tuesday showed crude supplies dropped 413,000 barrels last week after a downward revision to the data the prior week. Analysts polled by Platts were looking for a 2 million-barrel climb.
The API data come ahead of the more closely watched U.S. Energy Information Administration report due Wednesday.
Oil investors were further awaiting words from Fed Chairman Ben Bernanke when the U.S. central bank releases its latest policy statement later in the day. The bank is widely expected to keep policy on hold and to signal that it has no intention of slowing down or ending its ultra-loose monetary policy.
Loose monetary conditions, such as low interest rates and asset purchases through its so-called quantitative easing policy, tend to depress the dollar and support commodities prices.
The ICE dollar index DXY -0.49% traded at 82.73, down from 82.893 in late trading on Tuesday.
However, Wednesday’s gain for oil prices could prove to be short-lived, as concerns over Cyprus’s bailout remained in the spotlight.
“Clearly, market players anticipate that an alternative solution will be found for Cyprus. Nonetheless, the uncertainty surrounding this issue is likely to continue to keep the oil prices in check in the short run,” analysts at Commerzbank said in a note.
Elsewhere in the energy complex, most futures were on the rise.
Gasoline for April delivery RBJ3 +0.34% added 0.6% to $3.06 a gallon, while heating oil for the same month HOJ3 +0.72% moved 0.9% higher to $2.89 a gallon
Natural gas for April NGJ13 -1.18% slipped 1.3% to $3.92 per million British thermal units.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
