U.S. crude oil futures rose sharply Wednesday morning after fresh inventory data showed
that crude, distillate and gasoline supplies unexpectedly fell last week.
Gasoline supplies fell 600,000 barrels despite an expected inventory build of 500,000 barrels. Crude supplies fell 300,000 barrels (forecast down 100,000 barrels) and distillate stocks dropped 1 million barrels (forecast up 400,000 barrels).
The arrival of colder weather in the U.S. has also helped to lift energy prices this week. Other factors contributing to the market's upward momentum include a decline in the U.S. dollar, the currency in which crude oil is traded, and the possibility of further production cuts by OPEC, which meets next month in Nigeria.
BILL O'GRADY, ANALYST, A.G. EDWARDS, ST. LOUIS:
"It was bullish. The demand still seems to be pretty good, especially for distillate. The key to the report is that you finally saw refinery runs turn up, and despite the turn up in runs product stocks fell."
PHIL FLYNN, ANALYST, ALARON TRADING, CHICAGO:
"The market is reacting bullishly to the distillate stock draw. Distillates are moving in the wrong direction as they should be rising, not falling, at this time. This is not comforting to the market, even though supplies are above average for this period. Technicals are positive at this point, but the EIA data today can change the market psychology which has supported a slow, steady uptrend recently."
JASON SCHENKER, ECONOMIST, WACHOVIA BANK, CHARLOTTE, NC
"It's not a very exciting report. It's supportive and mildly price bullish. There are draws but nothing to write home about, but enough to prop up the market. There was a pull back on imports of gasoline and crude but week-over-week imports can be volatile and (the previous) week imports were high.
TIM EVANS, ENERGY ANALYST, CITIGROUP GLOBAL MARKETS, NEW YORK:
"This is bullish certainly relative to expectations and bullish on economic terms. All of the major categories of stocks showed declines right down the line. Really just a consistent picture across the board. Imports were down sharply, that is probably holiday related. Even adjusting for the impact of the holiday, demand on product side was quite firm and often it's down because of reduced refining holiday shipping schedules. Crude stocks are up year on year so there is surplus, but with refinery operating rates going up we are are going be chipping away at those inventories at least till year end."
TOM BENTZ, BNP PARIBAS COMMODITY FUTURES INC., NEW YORK:
"The stock data is supportive, considering most expectations called for builds across the board."