Oil prices rise as US crude reserves sink

8th July 2010, Comments 0 comments

World oil prices rose Thursday on the back of a larger than-expected drop in US crude inventories after Hurricane Alex disrupted some Gulf of Mexico production last week, analysts said.

New York's main contract, light sweet crude for delivery in August, rose 56 cents to 74.63 dollars a barrel, after nearly touching 76 dollars.

Brent North Sea crude for August advanced 49 cents to 74.00 dollars.

The US government's Department of Energy (DoE) announced Thursday that American oil reserves plunged by almost five million barrels in the week ending July 2.

That easily beat market expectations for a 1.8-million barrel drop, according to analysts polled by Dow Jones Newswires.

"The crude drop is likely to be related to last week's hurricane," said Credit Agricole CIB analyst Christophe Barret, adding that the data was "relatively supportive" for prices.

"Hurricane Alex was in formation in the US Gulf Coast and, due to weather conditions, Mexico closed its main export terminals," he noted.

"Oil installations started to return to normal on July 2 and we should see further delayed impact of Alex in next week's statistics."

Gasoline or petrol stocks gained 1.3 million barrels last week. Distillates, which include diesel or heating fuel, grew 300,00 barrels.

The DoE report was published one day later than normal owing to a US public holiday on Monday.

Oil prices also gained ground as traders took their cue from buoyant global equity markets and other upbeat US data.

European stock markets posted solid gains on Thursday, with the London FTSE 100 index adding 1.81 percent. In Paris, the CAC 40 rose 1.52 percent while in Frankfurt the DAX gained 0.71 percent.

Wall Street also shot higher on Thursday, with sentiment lifted by a decline in the number of Americans registering for jobless benefits and IMF's upward revision of the global growth rate.

Investors picked up bargains after the Labor Department said new claims for US unemployment benefits dipped more than expected last week.

Initial claims fell to 454,000 in the week ending July 3 from the previous week's revised figure of 475,000, the department said. Most economists had expected the latest weekly figure to be around 460,000.

© 2010 AFP

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