Commodity Corner: Oil Gains on Bullish Stocks Report

August crude oil on the NYMEX gained $1.88 Wednesday after investors were caught off-guard by a particularly bullish report on oil stocks.

Oil settled at $94.77 a barrel after the U.S. Energy Information Administration (EIA) announced that the country's commercial oil inventories fell by 1.2 million barrels last week to 359.5 million barrels. The 4.3 million-barrel decline from the previous week was much higher than what analysts had projected. A survey of Platts analysts, for instance, had anticipated more modest draw of 1.7 million barrels.

Also supporting oil was a stronger euro, bolstered by the Greek parliament's approval of an austerity package that will qualify the country for a bailout from the European Union and International Monetary Fund. The euro gained 0.4 percent against the dollar Wednesday. Oil, priced in dollars, becomes a better value for investors holding the euro and other currencies other than the greenback when the dollar weakens.

The August WTI contract price peaked at $95.84 and bottomed out at $92.66 during midweek trading. Brent futures gained 3.3 percent Wednesday to reach a price of $112.45.

Natural gas for August delivery lost 4.5 cents to settle at $4.315 per thousand cubic feet. It traded within a range from $4.28 to $4.38.

The July gasoline contract surged 12 cents to end the day at $3.01 a gallon—the intraday high. A sharp decline in gasoline production, as revealed by the EIA, contributed to the rally. The intraday low for gasoline was $2.88.

Matthew V. Veazey has written about the oil and gas industry since 2000. Email Matthew at mveazey@rigzone.com

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Brent Crude Oil : $51.82/BBL 0.53%
Light Crude Oil : $49.62/BBL 0.12%
Natural Gas : $3.14/MMBtu 3.28%
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