Oil prices leap on US supply concerns, banks' intervention
NEW YORK (AFP) — Oil prices rocketed more than four dollars higher Wednesday as traders reacted to news of falling US energy reserves and central banks' coordinated measures to ease tight credit conditions.
New York's main contract, light sweet crude for January delivery, shot up 4.37 dollars to close at 94.39 dollars per barrel.
In London, Brent North Sea crude for January jumped 4.03 dollars to settle at 94.02 dollars per barrel.
Prices climbed after the US Department of Energy (DoE) said that US stockpiles of distillates, including heating fuel and diesel, fell 800,000 barrels in the week ended December 7.
The market had expected a gain of 500,000 barrels. Distillates are under close scrutiny during the northern hemisphere winter when heating fuel demand increases.
The DoE said crude inventories fell 700,000 barrels, in line with consensus forecasts for a drop of 750,000 barrels.
Crude futures prices were also supported following a coordinated move by world central banks to inject more liquidity into global financial markets. The plan, announced by the central banks of Britain, Canada, the eurozone, Switzerland and the United States, helped ease concerns about an economic slowdown, which would likely dampen demand for energy.
The central banks' plan provided "a breath of economic optimism," said Antoine Halff, an analyst at Fimat.
John Kilduff of MF Global agreed.
"The central banks' intervention is enabling the dollar to decline once again and for economic outlook to be brightened," said Kilduff, adding the US stockpiles report also helped drive prices upward.
Elsewhere, the market tracked news of a large oil spill at a North Sea platform off the Norwegian coast. Thousands of tonnes of oil poured into the sea Wednesday as it was being piped to a loading buoy.
A plane, a helicopter and boats were scrambled to the scene in the Statfjord oilfield, some 200 kilometers (125 miles) from the Norwegian coast, to determine the extent of the spill and try to contain it, operator StatoilHydro said.
On Tuesday, crude futures had jumped by about two dollars as traders viewed the US Federal Reserve's quarter-percentage-point cut in interest rates as stimulating the US economy and boosting energy demand.
Prices had also found support after a twin car-bomb attack rocked Algiers, killing scores of people. Algeria is a member of the Organization of the Petroleum Exporting Countries and although the blasts did not affect oil supplies, they increased the political risk premium.
