Oil Rises On Sharp Drop in US Supplies
NEW YORK - The price of oil rose nearly 2 percent Wednesday as the U.S. government reported another steep decline in the nation's supplies of oil and gasoline.
By late morning in New York, U.S. benchmark crude for August delivery was up $1.94, or 1.9 percent, to $105.47 a barrel.
Brent crude was up 34 cents to $107.41 on the ICE Exchange in London.
Oil has risen about $12 a barrel, or 13 percent, in the past two weeks to the highest level since early May of last year. The initial catalyst was turmoil in Egypt. The country controls the Suez Canal, a critical channel for oil and gas shipments from the Middle East. But now oil is rising on signs of increased demand in the U.S., the largest consumer of oil and gasoline.
The government reported that crude supplies declined by 9.9 million barrels in the week ended July 5, more than twice the decline expected by analysts. Gasoline supplies were expected to rise, but instead fell by 2.6 million barrels.
In the past two weeks, oil supplies have dropped 20.2 million barrels, while gasoline supplies have fallen 4.3 million barrels.
At 373.9 million barrels, America's oil supplies are 1.1 percent below year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.
The drop in supplies suggests stronger demand and underlines the signs of economic recovery shown in last week's stronger-than-expected U.S. hiring report.
A report from the Organization of Petroleum Exporting Countries forecasting rising global demand in 2014 also helped boost prices. The Vienna-based group said it expected additional global demand to reach 1 million barrels a day next year, compared to an annual increase of around 800,000 barrels a day in 2013.
Oil prices were also supported by a weaker dollar — which makes crude cheaper for traders using other currencies — and the political crisis in Egypt. While Egypt is not an oil producer, it controls the Suez Canal, a critical channel for oil and gas shipments from the Middle East.
Pablo Gorondi in Budapest contributed to this report.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.