Despite low-volume, pre-holiday trade, U.S. crude oil futures soared more than $2 on the New York Mercantile Exchange on Wednesday, the price per barrel lifted primarily on bullish government data indicating a steep drawdown in crude oil and products stockpiles.
Rallying on better-than-anticipated inventory data, the price of light, sweet crude oil for February delivery added $2.27 to yesterday's final price tag to close above the previous front-month contract's $75-threshold at $76.67 a barrel on the NYMEX.
Gaining closer to a new high of $6 on the NYMEX as winter weather grips the nation, natural gas spot prices at the Henry Hub also packed a punch ahead of the holidays, ultimately settling at $5.821 per thousand cubic feet.
Supplies Loosen Stranglehold
Today, the U.S. Energy Information Administration reported that crude oil stockpiles dropped by 4.9 million barrels in the week to Dec. 18. The steep drop in oil supplies beat out expectations for a smaller drawdown, the higher number of which can be attributed to sliding imports, as well as inventory write-offs for tax consideration purposes exiting 2009, according to most analysts.
Additionally, distillate stocks spiraled downward last week by 3.1 million barrels, while gasoline inventories fell by 900,000 barrels.
Yesterday, the American Petroleum Institute estimated that crude oil and products stocks would decline by 3.7 million barrels and 745,000 barrels, respectively. However, the API's forecast did overestimate the decline in gasoline supplies by some 200,000 barrels ahead of the Department of Energy's official report.
Also helping to prop up energy prices for the day, the American dollar lost ground in a battle royal against other major currencies as disappointing figures for new home sales in the U.S. put a damper on market participants' economic optimism. When the greenback weakens, the U.S. currency's denominated commodities become cheaper for investors with dollars in hand.
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