Oil extends rally above $82 on lower U.S. crude stocks

 @ibtimes on August 04 2010 12:13 PM

The benchmark U.S. crude oil price rose a touch on Wednesday, responding to official figures showing a higher than expected fall in crude stocks.

The optimism was, however, tempered by a rise in gasoline and distillate inventories.

Responding to the figures from the Energy Information Administration, Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois, said: The numbers look supportive for crude with imports dropping 1.5 million barrels per day and total (stockpiles) falling 2.8 million barrels.

Bottom line: the report doesn't alter a near-term bullish view, Ritterbusch added.

U.S. crude for September was 24 cents higher at $82.79 a barrel on the day by 1547 GMT (11:47 a.m. EDT), following the 1430 GMT data release. Consequently, U.S. crude was on course for a five-day winning streak.

Crude oil stocks fell by 2.8 million barrels to 358.0 million in the week to July 30, according to the EIA. Gasoline stocks were up 700,000 barrels at 223 million, with total distillate fuel 2.2 million barrels higher at 169.7 million.

The American Petroleum Institute also said late on Tuesday that gasoline stocks had increased and crude stocks had fallen.

CAUTIOUS ON IRAN

The market also reacted cautiously to Wednesday's news of an attack on Iranian President Mahmoud Ahmadinejad.

Analysts said the market was wary of moving on the initial reports of the attack.

Prices haven't moved today but we've just had a very strong rally, said Paul Harris, head of natural resources risk management at Bank of Ireland. Geopolitical risk from the Middle East is broadly priced in.

Front-month ICE Brent dipped8 cents on the day to $82.60.

I don't think there is a fundamental justification for prices above $80, said Christophe Barret, oil analyst at Credit Agricole CIB in London. He pointed to what he saw as recent weak economic news, such as Monday's ISM survey of manufacturing purchasing managers showing a slowing in growth.

However, Wednesday's corresponding survey of the U.S. service sector showed an acceleration in growth.

(Additional reporting by Alejandro Barbajosa; editing by James Jukwey)

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