Meanwhile, the weekly EIA report released yesterday showed a decline in crude inventories by 4.9 million barrels, compared to the previous drop of 3.7 million barrel and higher than expectations for a drop of 2.0 million barrels; crude stockpiles reached 327.5 million barrel and are still higher than the average range for this time of year. Motor gasoline inventories dropped by 0.9 million barrels last week and remains higher than the average range, while distillate fuel, that includes heating oil, fell by 3.1 million barrels and also above the year’s average range.
Crude contracts for February delivery jumped yesterday by 3.1%, the strongest gain in over four weeks which was supported by the drop in U.S stockpiles. This reflected improvement in demand levels, with more expectations for further rise as the recession recedes.
On the other hand, US reports yesterday signaled improvement in personal spending and income throughout November. However, this improvement will support growth levels in the US, especially since consumer spending makes up two-thirds of the GDP; thereby supporting demand on crude oil, since it is considered to be a core substance in numerous industries.
However, the dollar declined yesterday after new home sales unexpectedly fell last month, reviving the weak performance in the housing sector which is considered to be one of the main reasons behind the current economic crisis. Nonetheless, if this sector continues to weaken it will impede achieving the currently desired economic recovery and thereby delaying oil’s improvement.
Crude contracts for February delivery opened yesterday at $74.52 per barrel, recording the highest at $76.95 and lowest at $74.25 per barrel, where it presently trades around $76.20 per barrel.
The S&P GSCI index closed yesterday at 511.865, after rising by 12.13 points; whereas, the S&P GSCI for energy closed at 257.73 after gaining 7.53 points.
Today trading remains subdued with the Christmas holiday and the absence of many markets and others to have shortened sessions; crude contract for February delivery today opened at $76.55 per barrel recording its highest at $77.45 and lowest at $76.35 per barrel, but currently trading around $77.30 per barrel.