Oil Ranges Near $83 as US Crude Stocks Decline
Oil prices surged as much as $2 on Thursday, approaching the record high, after a surprise decline in U.S. inventories stoked concerns about supplies in the world's top consumer ahead of winter.
U.S. crude oil stocks fell 1.7 million barrels last week to the lowest level since January, a report by the Energy Information Administration showed, countering analyst expectations that inventories would rise by 900,000 barrels.
The drop helped push U.S. oil futures to a range of $83 a barrel after coming close to the all-time high of $83.90 a barrel struck on Sept. 20. London Brent crude rose almost $2.
"The EIA data is basically supportive. The drop in crude stocks was caused by a big drop in imports and that could have led to the bigger-than-expected drawdown," said Phil Flynn, analyst for Alaron Trading.
U.S. distillate supplies fell by 600,000 barrels last week, according to the EIA, while heating oil stocks rose 1 million barrels. Gasoline stocks rose 1.7 million barrels.
Concerns of a winter shortfall have helped fuel oil's rally over the past month and sent U.S. heating oil prices to a record high on Thursday.
"There is a broad consensus that supplies will get tighter this winter," the International Energy Agency said in its monthly report.
The IEA added that high oil prices were tempting consumers to switch to cheaper natural gas and cutting estimates for economic growth. The agency slashed its fourth-quarter demand estimate by 320,000 barrels per day to 2.03 million barrels per day.
The weakening U.S. dollar has also helped push oil and commodity prices higher over the past month. Gold and platinum reached fresh highs on Thursday, as the greenback weakened against the euro.
"The fall of the dollar is a prime mover in this crude and distillate rally," said Andy Lebow, broker a MF Global in New York. "The dollar's fall is encouraging investors to put their money in alternative investments, including commodities."
The decision by the Organization of Petroleum Exporting Countries to add 500,000 barrels per day of crude to the market starting in November has not cooled prices.
Top exporter Saudi Arabia told Asian customers on Thursday it would increase shipments by about 10 percent.