Crude Glides by $72 on Bullish Draw in Supplies

Soaring more than 3% on bullish inventory data, oil prices jumped above $72 on the New York Mercantile Exchange Wednesday as investors were also spurred toward dollar-denominated commodities by a weaker greenback.

Adding nearly $2 to yesterday's final price tag, the price of light, sweet crude oil for January delivery rose to $72.66 a barrel, while natural gas spot prices at the Henry Hub posted a slight loss today, settling at $5.462 per thousand cubic feet.

Oil Glides on Better-Than-Expected Slide

"I think the main reason behind today's jump in oil prices was the Department of Energy's inventory report, which showed a surprisingly larger draw in crude oil stocks than people anticipated," noted Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Today, the U.S. Information Administration released its weekly oil inventory report, which indicated that crude oil supplies fell by 3.7 million barrels in the week to Dec. 11. Additionally, distillate and heating oil supplies declined by 2.9 million barrels and 2.3 million barrels, respectively.

The government's official report beat out analysts' expectations; an earlier Reuters analyst survey showed crude stocks down by only 1.8 million barrels and distillate stocks down by a mere 600,000 barrels for the previous week.

"This amounted to the second week in a row we've seen crude stocks draw more than 3.5 million barrels, as well as distillates draw more than 2 million barrels," the analyst underscored.

"As far as crude goes, the primary reason behind last week's draw was that crude oil imports have dropped down to just above 7.5 million barrels a day, or below normal, and I think there might also have been some tax inventory changes we usually see at the end of the calendar year," McGillian said.

"As for natural gas, an early estimate for tomorrow's EIA storage report is for a pretty big withdrawal, and that could continue to boost the market as people begin to assess that more gas can potentially be withdrawn from storage than originally thought."