Futures for crude oil were buoyant today after a report showed a decline in US crude supplies.
The American Petroleum Institute (API) said late on Tuesday that crude oil stockpiles in the US shed a massive 5.2 million barrels last week, a sign that oil demand from the world’s largest energy consumer is on the rise.
This was a much bigger decline than analysts expected to see. A survey by Bloomberg predicted a 2 million barrel drop.
Traders are now waiting for a more closely watched report on inventories from the US Department of Energy, which will be released late in today’s session.
Sentiment in commodity markets improved further after US President Barack Obama welcomed a US$3.7 trillion debt reduction plan proposed by a bipartisan group of US senators known as the Gang of Six.
Obama’s support of the plan was seen as an indication that US lawmakers will manage to work out a deal to raise the country’s debt ceiling before the 2 August deadline and avoid a default.
The news prompted investors to go for riskier assets and dump Treasuries, gold and the US dollar, which are normally used for wealth protection amid economic uncertainty.
The decline in the US dollar delivered another boost to demand for the dollar-denominated crude by making it cheaper for holders of other currencies.
US light, sweet crude for September delivery rose US$1.10 to US$98.96/barrel in morning trade on the New York Mercantile Exchange (NYMEX).
September Brent crude advanced US$1.01 to US$118.26/barrel on the ICE Exchange this afternoon.
Today’s top risers in the oil and gas sector were:
Victoria Oil & gas (LON:VOG), up 8 percent at 4.3 pence at midday
Max Petroleum (LON:MXP), up 6 percent at 13.75 pence
Gulf Keystone Petroleum (LON:GKP), up 4.5 percent at 142.62 pence
Cadogan Petroleum (LON:CAD), up 4 percent at 40.5 pence
Global Energy Development (LON:GED), up 3.5 percent at 90 pence
The top fallers were:
Matra Petroleum (LON:MTA), down 36.5 percent at 1.65 pence at midday
Nighthawk Energy (LON:HAWK), down 12 percent at 4.94 pence
Woburn Energy (LON:WBN), down 10 percent at 2.25 pence
Westmount Energy (LON:WTE), down 7 percent at 26 pence
Frontera Resources (LON:FRR), down 6.5 percent at 3.5 pence