Oil Trades near $72 After Supplies Drop to Lowest since January
Source: Bloomberg, Christian Schmollinger and Ben Sharples (9/17/09)
"There are not a lot of reasons to bet against oil at this point."
Crude oil inventories fell 4.73 million barrels, the weekly report showed yesterday, more than the 2.5 million-barrel decline forecast by analysts in a Bloomberg News survey. Prices also gained as the dollar extended its decline to the weakest level in almost a year and as global equities advanced, spurring expectations of improving fuel demand.
"The gains in equities support optimism for the economic recovery that would drive oil demand and lead to supply tightness," said Victor Shum, a senior principal at consultant Purvin & Gertz Inc. in Singapore. "The big drawdown was unexpected and supportive for prices."
Crude oil for October delivery was at $72.55 a barrel, up 4 cents, in electronic trading on the New York Mercantile Exchange at 2:57 p.m. in Singapore. Yesterday, the contract rose $1.58, or 2.2%, to $72.51. Futures have gained 63% this year.
The dollar fell to as low as $1.4767 per euro from $1.4709 yesterday in New York, the weakest level since Sept. 25, 2008. A lower dollar increases the appeal of commodities as alternative investments.
"The dollar continues to hit new lows and equities markets are rallying, giving support to the renewed global economy which will consume more oil," said Mike Sander, an investment adviser at Sander Capital in Seattle. "There are not a lot of reasons to bet against oil at this point."