Oil prices rise as US crude stocks plunge

, Comments 0 comments

Oil prices rose Wednesday after official data showed US crude stockpiles fell last week by the biggest amount in eight years, analysts said.

Brent North Sea crude for delivery in January was up 88 cents at 92.09 dollars a barrel in late London trade.

New York's main contract, light sweet crude for January, gained 42 cents to 88.70 dollars.

The US Department of Energy said that crude inventories shed 9.9 million barrels in the week to December 10 -- the biggest weekly drop for eight years.

Analysts had meanwhile expected a fall of only 2.7 million barrels amid freezing weather in the US northeast, Dow Jones Newswires said.

"It's a huge draw (fall) and it caught the market off guard," said Stephen Schork, head of energy-advisory firm the Schork Report.

Cold temperatures right across the northern hemisphere and OPEC's recent decision to maintain its output levels should support to prices in the long term, analysts said.

"Oil prices look firm at current levels supported by strong demand, the OPEC meeting outcome, cold weather and inventory dynamics," Barclays Capital analysts said in a report.

"Moreover, with OPEC producers showing little intent at dampening prices at current levels, rather expressing surprising ease with current proceedings, the downside from current levels appears minimal to us."

Oil prices had fallen early Wednesday as the dollar rallied against the euro. The single currency slid after Moody's rating agency placed Spain on review for a possible downgrade, renewing fears about the eurozone debt crisis.

The euro plunged as low as 1.3263 dollars, which compared with 1.3375 dollars late in New York on Tuesday.

A stronger dollar makes oil more expensive for buyers holding other currencies, denting demand.

The US Federal Reserve's decision on Tuesday to maintain record-low interest rates and its massive asset purchasing policy had a limited impact on the oil market, analysts said.

Elsewhere on Wednesday, Ghana began production from one of the largest recent oil discoveries in West Africa, transforming it into a significant oil producer.

The Jubilee field was discovered in 2007 by US firm Kosmos and is estimated to contain some 1.8 billion barrels, one of the largest finds in West Africa in recent years.

Anglo-Irish firm Tullow says it will produce about 55,000 barrels a day within the first few months before more than doubling output to 120,000 bpd.

© 2010 AFP

0 Comments To This Article