Crude Poised Just Below $80 As Investors Digest Latest Inventory Report

Reported by Proactive Investors on Thursday, 19 November 2009 (on November 19, 2009)

The crude oil price has eased around half a percent to sit poised just below $80. Overnight American supply data pushed oil higher as the Department of Energy’s report revealed a larger than expected draw down in Crude, Gasoline and Distillate supplies. In electronic trading Globex WTI futures were last changing hands around $79.80.Last night’s U.S. Department of Energy report showed an 887,000 barrels decline in crude stocks, which was about 200,000 barrels less than analyst’s average expectations. Similarly gasoline stocks fell further than anticipated, with a drop of 1.7 million barrels. In broad terms the data reflected earlier reports from the American Petroleum institute (API).The API reported a 4.3 million barrel draw-down in crude inventories last week - many analysts and commentators are pointing to reduced production, processing and oil transportation in the Gulf of Mexico caused by Hurricane Ida last week as the reason.In previous weeks, many analysts have referenced the fact that US inventories are currently at comparatively higher levels and raised doubts over the validity of $80 oil, based on current supply-demand dynamics.Analysts identified the weak dollar as the primary stimulant in crude oil’s recent rise to $80. Some suggested that the weak dollar has been masking the fundamental supply and demand issues in the underlying energy market which are claimed to imply that prices should be lower.In London the oil & gas sector was mixed. BG Group (LSE: BG) was in the lead, advancing 1.2% after announcing record productivity test results from its project in Brazil. Cairn Energy (LSE: CNE) and Petrofac (LSE: PFC) rose marginally as did BP (LSE: BP), while fellow super-major Shell (LSE: RDSB) posted small losses.Tullow Oil (LSE: TLW) was flat.Heritage Oil (LSE: HOIL) outperformed the sector with a 3.5% climb, while other midcaps headed in different directions with Dragon Oil (LSE: DGO) posting a small gain and Dana Petroleum (LSE: DNX) dipping marginally.

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