ICE Brent crude rose 42 cents to $93.59, its highest since October 2008. U.S. crude for February climbed 42 cents to $90.24 a barrel by 0915 GMT, only the second time since 2008 it climbed above $90.
With two days to go until Christmas Eve risk markets have ignited the afterburner, reinforcing one more time the all-pervasive mantra throughout 2010.
American Petroleum Institute data released late on Tuesday in the U.S. showed a large 5.8 million barrel decline in weekly crude stocks, surpassing analyst expectations.
Big drops in crude oil and gasoline inventories in the API data pushed the oil market to the up. But buying interest around this level, around $90 a barrel, is not so large.
API data also showed an unexpected 2.9 million barrel fall in gasoline inventories.
The U.S. Energy Information Service will release its inventory data at 1530 GMT on Wednesday.
Oil prices were also supported by chilly weather in northern Europe and the United States, which has increased heating fuel demand. U.S. heating oil demand was expected to average 4.6% above normal this week.
Thin trading volumes lent further support to oil prices. Ahead of the long Christmas holiday, there are relatively fewer participants. Therefore, it is possible to extend gains through the night on thin volumes the market is not that bullish.
Looking beyond the New Year, it expected strong Chinese demand to continue supporting prices.
We have a strong suspicion that upside surprises and the resultant global demand upgrades have not yet run their full course.
Indeed, the persistence of strong growth and further upward revisions to Chinese oil demand could drag long-term oil demand another leg higher.
The U.S. dollar fell to a two-month low against the Swiss franc on Wednesday and was 0.26% down versus a basket of currencies.
A weaker greenback supports dollar-denominated commodities such as oil, making it cheaper for those holding other currencies.
Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.
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