Crude prices advanced over 1.5% as better than expected US Q3 GDP data supports the oil market. Investors and analysts evaluate the American growth outlook against the backdrop of a substantially over-supplied market that is also trading.
On London’s Intercontinental Exchange, December WTI futures climbed to trade at $78.60 after starting the day near $77.
Crude oil declined the most in a month yesterday as an Energy Department report showed that both gasoline and crude oil stockpiles rose last week, gasoline increased by 1.6 million barrels while crude added a further 778,000 barrels to take US stockpiles to 339.9m.
The report conflicted against analyst consensus, which had anticipated a decline of 1 million barrels. Over-supply concerns have increasingly become an issue recently. In addition to US stockpiles tipping 340m barrels, last week OPEC identified that internationally approximately 125m additional barrels of oil are currently stored in offshore tankers.
Economists, Analysts and Investors will now focus on US growth and the implied impact on oil consumption. This afternoon the US Commerce Department reported a 3.5% increase in GDP for the third quarter, beating analyst expectations of 3.2%, which may spark hopes that the pressure caused by a backed up supply environment will be overcome as the US emerges out of recession.
Shell was the leading faller in the sector with a 5.5% loss, while fellow supermajor BP (LSE: BP) declined marginally, as did Petrofac (LSE: PFC). BG Group (LSE: BG) slid 3% to 1,063 pence, while Cairn Energy (LSE: CNE) lost 2%.
Tullow Oil (LSE: TLW) was the leading performer in the sector with a small gain. Midcaps did slightly better as Heritage Oil (LSE: HOIL), Dana Petroleum (LSE: DNX) and Dragon Oil (LSE: DGO) stayed around the opening levels.
Juniors were mixed. Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) recouped its recent losses with a 6% climb, while Kazakhstan operating Max Petroleum (LSE: MXP) and Europe focused oil and gas developer Ascent Resources (AIM: AST) followed with both tacking on more than 4.5%.
Iraq operating Irish oil company Petrel Resources (AIM: PET) headed in a different direction, shedding more than 6%.