Oil prices rose sharply on Wednesday, a day after the release of data showing an unexpected drop in stocks in the United States, the world's largest oil consumer. In London, the price of benchmark Brent crude for September delivery was showing a gain of 69 cents to $27.83 a barrel.
In New York light sweet crude for September delivery was trading 71 cents higher at $28.5 a barrel.
The surge follows the publication of data by the American Petroleum Institute (API) Tuesday, showing a fall in crude oil stocks of 9.002 million barrels to 284.7 million in the week to July 28 from the previous week.
Compared with the figure a year earlier, crude stocks showed a fall of 41.5 million barrels.
Gasoline stocks fell by 1.068 million barrels to 207.1 million from the week earlier and by 2.97 million barrels compared with a year ago.
Distillate fuel stocks rose 1.057 million barrels to 112.5 million over the course of the week, but 27.2 million barrels lower that a year earlier. GNI Research in its daily note said the data showed "a shockingly large draw."
According to the brokerage, the draw was "largely due to a sharp drop in crude imports rather than an increase in refining rates -- indeed refinery runs were reported down 0.6 percent on the week." However, it urged traders not to get "overexcited."
Referring to recent price falls prior to Tuesday's surge, GNI wrote: "While we have been warning traders not to get sucked in on the downside, it is important not to make too much of this stock draw. It is most likely that the drop in imports is a reflection of the 'buyer pullback effect' that we have seen since prices started to fall."
Declines in the price began early last month when Saudi Arabia, the world's leading producer, pledged an Organisation of Petroleum Exporting Countries (OPEC) output increase of 500,000 barrels per day unless the market stabilised of its own accord.
Saudi Arabia incurred criticism from other OPEC members for its "unilateral" stance. But the differences of opinion appeared resolved when Venezuelan Oil Minister Ali Rodriguez, who is also holder of the rotating OPEC presidency, said that OPEC would increase production provided prices remained high.
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
