Oil keeps on creeping up. It neared $65 dollars today, on the surprise news that oil stocks fell by 5.4 million barrels from the week prior. Refiners used lots of oil last week to quench the thirst of Memorial Day drivers.
Add in the fact that OPEC doesn’t plan on increasing production, and would like to see $75 barrels of oil, and boom, you’ve got a mid-day pop to $64.41.
Reuters: Oil jumped 3 per cent to top $65 a barrel Thursday after OPEC decided to keep output unchanged and government data showed a steep drop in U.S. crude inventories.
U.S. crude oil for July delivery traded up $1.91 to $65.36 a barrel by 2:21 p.m. EDT (1821 GMT) after having touched $65.42 earlier, the highest level since November. London Brent crude rose $2.13 to $64.63 a barrel.
U.S. crude stocks fell by 5.4 million barrels in the week to May 22, the U.S. Energy Administration said, above analyst expectations for a 700,000-barrel decline as refiners ramped up output ahead of the summer.
Analysts said while the data showed gasoline demand still trailing year-ago levels, it was looking stronger during the seven days leading into the May 23-25 Memorial Day holiday weekend, which traditionally kicks off summer holiday travel.
“What we are seeing here is the demand side start to improve,” said analyst Phil Flynn at Alaron Trading in Chicago.
“Gasoline demand over the Memorial Day weekend is a critical point in judging the health of the U.S. economy. I don’t think the increased demand over the holiday was a fluke.”
OPEC Secretary-General Abudullah al-Badri told Reuters Financial Television that U.S. demand was showing signs of recovering, after the economic crisis battered global consumption and sent crude prices off record highs near $150 a barrel struck in July.
OPEC ministers meeting in Vienna opted to leave target output levels unchanged as they bet a strengthening economy and signs of rising demand would support prices.
Some members of the 12-member producer group voiced concern high global inventories could weigh on prices, but Saudi Arabian Oil Minister Ali al-Naimi said demand was rising and would drain away excess supplies.
“The price is good. The market is in good shape. Recovery is under way. What else could we want?” he said.
U.S. stocks gained Thursday as the rise in oil prices boosted energy shares, overshadowing mixed economic data.
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