Oil Prices Hover Near $61 a Barrel
Thursday March 22, 8:25 am ET
By George Jahn, Associated Press Writer
Oil Prices Hover Near $61 a Barrel on Greater-Than-Expected Drop in U.S. Gasoline Stockpiles
VIENNA, Austria (AP) -- Oil prices climbed more than US$1 a barrel Thursday after the U.S. government reported a greater-than-expected drop in gasoline stockpiles.
Traders also appeared to interpret a decision by the U.S. Federal Reserve to leave interest rates unchanged as positive for the market.
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Light, sweet crude for May delivery rose US$1.15 to US$60.76 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The Brent crude contract for May jumped US$1.09 to US$61.86 a barrel on the ICE Futures exchange in London.
U.S. gasoline stocks declined by 3.4 million barrels to 210.5 million barrels in the week ended March 16, according to the U.S. Energy Information Administration's weekly report. The drop was larger than the 1.6 million barrel drop forecast by analysts surveyed by Dow Jones Newswires.
"The market reacted to the larger-than-expected draw in gasoline inventories even though the inventory report showed somewhat mixed results," said energy analyst Victor Shum, of Purvin & Gertz in Singapore. "The market simply ignored the crude inventory build but focused more on the gasoline inventory drawdown."
Light sweet crude prices had risen 36 cents Wednesday to settle at US$59.61 a barrel, even though the report showed U.S. crude oil inventories rose by 4 million barrels to 329.3 million barrels, more than expected. Distillate stocks, which include heating oil and diesel, fell by 1.7 million barrels.
Oil prices continue to supported by strong demand for oil products in the U.S. and Asia, Shum said.
"Demand for oil products remains good. Even though the recent turmoil in the global equities market raised some concern about the state of the U.S. and Chinese economy, none of that really has shown in oil demand," he said.
A plunge in Wall Street last week stirred concerns about the U.S. economy's health and future demand for energy. Asian markets also fell, but have since bounced back.
Vienna's PVM Oil Associates said prices also were being supported by the U.S. Federal Reserve's decision Wednesday to keep interest rates unchanged, noting: "An increase in rates could have affected demand in the world's largest oil consumer."
Heating oil futures for April gained nearly 3 cents to US$1.6930 a gallon (3.8 liters) while natural gas prices gained 5 cents to US$7.210 per 1,000 cubic feet.
Associated Press writer Derrick Ho in Singapore contributed to this report.
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