After the Energy Department reported the first increase in U.S. crude supplies since mid-August, crude and other energy futures dropped sharply. The 2-day drop is the first such period for crude since August, and was prompted by the inventory data and the fact that tropical storms have not hit production in the Gulf. However, the most important item in the Energy Department's report was supplied in the consumption numbers. Motor gasoline demand increased by 0.4% compared to a year ago, distillate demand dropped 1.2%, and jet fuel demand dropped 1.9%. However, a late-day rally thanks to a drawdown in inventories at a Cushing, Oklahoma hub for Nymex crude pushed crude back above the $80 mark. November-dated crude finished the day 77 cents higher at $80.30 per barrel after hitting an intraday low of $78.45 per barrel.
One analyst noted that the rally was technical in nature, as it is not untypical to get a reversal off the inventory report as again some value buyers come in. Another analyst noted that the increase in crude supplies may be an aberration, as we are still lower on a year-over-year basis.