Oil prices climb as US crude stocks dive

20th July 2011, Comments 0 comments

Oil prices rose on Wednesday after news that US crude stocks slumped last week, signalling strengthening energy demand in the world's biggest economy.

New York's main contract, light sweet crude for August delivery advanced 69 cents to $98.19 a barrel.

Brent North Sea crude for September delivery added 99 cents to $118.05.

US crude oil inventories tumbled 3.7 million barrels in the week to July 15, far more than market expectations for a drop of only 1.4 million barrels, according to analysts polled by Dow Jones Newswires.

"Crude numbers remain more supportive than the rest of the stats," noted Credit Agricole analyst Christophe Barret.

Official data showed gasoline (petrol) reserves rose 800,000 last week, confounding forecasts for a drop of 200,000. Distillates, including diesel and heating fuel, soared 3.4 million barrels, against expectations for a gain of 1.2 million.

Prices also advanced amid tentative signs of progress over a second Greek bailout package, easing investor concerns that the eurozone debt crisis could undercut economic growth.

"Prices continued their upside momentum and climbed higher, supported by a weaker US dollar that provided some well-needed support at these uncertain market conditions," Sucden analyst Myrto Sokou said.

Germany suggested on Wednesday that deadlock over a Greek rescue can be broken at Thursday's eurozone debt summit after the European Commission warned that Europe was at risk.

The German government voiced confidence that Chancellor Angela Merkel and French President Nicolas Sarkozy will reach an agreement during talks in Berlin on the eve of Thursday's summit of 17 eurozone leaders.

"Germany and France ... must agree. If this does not happen then we can't make progress in Europe. There is confidence on both sides that such a common line can be worked out this evening," said Merkel's spokesman Steffen Seibert.

He said Merkel was "very confident" that the summit in Brussels will produce a "good result."

His comments marked a change in tone after Merkel on Tuesday had played down expectations of a "spectacular," all-encompassing solution.

Global markets were also given a lift after US President Barack Obama on Tuesday threw his weight behind a plan to slash the country's deficit that could see it avoid a default.

Oil dealers are concerned that a default in the United States or Greece could trigger financial upheaval and an economic slowdown, cutting global energy demand.

© 2011 AFP

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