Crude hits new high on inventory lows

Crude oil rose by more than $2 per barrel on the New York Mercantile Exchange (Nymex) after US government data showed a drop in inventories, surprising some analysts.

Nymex West Texas Intermediate for May delivery rose $2.37, or 2.2%, to close at $110.87 on Nymex, following an intraday record high of $112.21/bbl.

The 3.1 million-barrel drop in crude-oil stockpiles reported by the Department of Energy (DoE) sent the price up. Gasoline futures also surged by 2.6% on the news, according to Bloomberg.

Analysts note that a slowdown in imports is partly responsible for the inventory drop as US demand remains robust, despite comments this week from Guy Caruso of the Energy Information Administration that summer gasoline demand will shrink for the first time since 1991 due to the weakness in the US economy.

“Now is not the time to talk of weakening fundamentals in the US,” noted Barclays Capital in a research report.

“Relative to the normal seasonal pattern US oil product inventories have been falling at a rapid rate of 0.61 mb/d over a concerted period of three weeks. Further, that transition has occurred without any excessive build in crude inventories,” it said.