Crude oil pulled back on Thursday, after last night’s better than expected supply data from the US department of energy spurred the ‘black gold’ back above $73/barrel. With the holiday season on the horizon for Western markets, and with no significant economic or fundamental reports expected, oil investors have largely followed Forex markets this morning.
Futures have eased off, dropping around 60 cents as the dollar has been rising against most currencies. Commentators have pointed to a drop in risk-appetite for the sharp bounce in the US dollar, as many investors’ lock-in profits and return to the lower-risk and low-yielding asset class.
Last night, the US Department of Energy (DoE) said crude oil inventories fell by 3.6 million barrels, exceeding analyst expectations of a 2m drawdown. Gasoline stockpiles were also improved from anticipated levels, with as inventories rose by nearly 900,000 barrels against expectations of a 1.2 million build. Distillates, which include diesel and heating oil, fell sharply with a drawdown of almost 3 million barrels compared to expectation of a 0.5 million decline.
The DoE’s supply report contrasts with Tuesday’s American Petroleum Institute (API) supply data, which said that crude stockpiles grew last week.
The API is the US trade association for the oil and natural gas industry; it represents over 400 corporations in North America, including producers and refiners. Unlike the Government inventory report, supplied by the Department of Energy, the API data is compiled from voluntary data supplied by its members. Typically the DoE report carries more weight among crude oil investors.
Major oil and gas stocks didn’t show much movement this morning. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) were flat, while Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) lost less than 1%. BG Group (LSE: BG) and Cairn Energy (LSE: CNE) both added about 1.3%.
Midcaps were mixed as while Dragon Oil (LSE: DGO) and Heritage Oil (LSE: HOIL) added less than 1%, fellow FTSE 250 constituent Dana Petroleum (LSE: DNX) was down 1%.
Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) was one of the top performers in the junior oil sector, advancing 8%. North Sea explorer Xcite Energy (AIM: XEL) also did well, tacking on 4.5%.