Oil rises on surprise drop in U.S. crude supplies
Crude
futures rise after U.S. data confirm an unexpected drop in crude
supplies last week, but the arrival of monetary policy decisions of the
Federal Reserve and the uncertainty of Cyprus gains under control.
Oil
futures rose Wednesday after U.S. government data confirmed an
unexpected drop in crude supplies last week, but the arrival of monetary
policy decisions of the Federal Reserve and the uncertainty of Cyprus
remained under control price increases.
Crude
for April delivery rose 32 cents, or 0.4%, to $ 92.48 a barrel on the
New York Mercantile Exchange, recouping some of the losses incurred $
1.58 on Tuesday. The
heavy losses in the previous session was sparked by the uncertainty
surrounding a rescue plan for Cyprus, Cypriot legislators and rejected a
controversial tax on bank deposits as part of the bailout agreement.
May
crude, which becomes the futures month contract after the session ends
Nymex is trading at $ 92.79 a barrel, up 27 cents, or 0.3%.
In London, Brent crude for May delivery added 50 cents, or 0.5%, to $ 107.92 a barrel on ICE.Nymex
prices initially added some earlier gains after the Energy Information
Administration reported a drop in crude supplies, compared prices back
profits.
Crude supplies fell 1.3 million barrels for the week ending March 15, according to the EIA. Analysts polled by Platts expected a rise of 2 million barrels. "While
the overall figure for oil is bullish and spot prices are reflecting
that, we must keep in mind that we are well supplied primarily (well
above five-year averages) and consumption remains weak" said Tariq Zahir, managing member of Tyche Capital Advisors."
We
were not surprised to see oil markets to have a leg down mainly because
he saw the initial spike higher in major numbers," he said.
Supplies of gasoline also fell by 1.5 million barrels, while distillate stocks fell by 700,000 barrels, according to the EIA. Analysts
had forecast a drop of 2.5 million barrels in gasoline stocks and a
decline of 1.5 million barrels in distillate supplies.
The
American Petroleum Institute released Tuesday showed a drop in crude
supplies of 413,000 barrels last week and also downwardly revised data
for the week ended March 8.
The next market will act if the Fed and offers a change to monetary policy language.Oil investors await word of Fed Chairman, Ben Bernanke, when the U.S. central bank releases its latest policy statement later in the day. The bank is expected to keep policy on hold and to show that it has no intention to slow or end its ultra-loose monetary policy.
Loose
monetary conditions, such as low interest rates and asset purchases by
the Fed policy called quantitative easing, tend to depress the dollar
and commodity prices support.
On Wednesday, the ICE dollar index traded at 82,697, compared to 82,893 in late trading Tuesday.Keeping
pressure on oil prices, however, were concerns about bailout of Cyprus,
which remained in the spotlight, and its wide range of potential impact
on the euro area economy.
Cyprus's
parliament on Tuesday rejected a bailout proposal, which included a tax
on bank deposits, leaving their plans short banking sector into chaos."Clearly,
market participants anticipate that an alternative solution will be
found for Cyprus. Nevertheless, the uncertainty surrounding this issue
is likely to continue to keep oil prices under control in the short
term," said analysts at Commerzbank in a note.
Elsewhere in the complex energy futures traded on a mixed note.Gasoline
for April delivery was slightly lower, 0.1%, to $ 3.04 a gallon, while
heating oil for the same month moved a penny, or 0.5%, higher than 2, $ 88 a gallon
Natural
gas for April fell 6 cents, or 1.4%, to $ 3.91 per million British
thermal units, retreating after climbing over the past five trading
sessions.
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