RTRS: Oil rises on U.S. crude, product inventory drop
By Matthew Robinson
NEW YORK (Reuters) - Oil prices rose on Wednesday as a drop in U.S. oil and fuel inventories outweighed wider economic concerns.
Crude stockpiles in the world's top consumer fell by 900,000 barrels last week, more than forecasts for a 300,000-barrel drop, the U.S. Energy Information Administration reported.
Gasoline and distillate stocks dropped by 1.7 million and 300,000 barrels. respectively.
"Overall, the figures were fairly bullish. Gasoline was a much larger draw than expected," said Mike Zarembski, senior commodities analyst at optionsXpress in Chicago.
The declines came after Tropical Storm Ida forced oil and natural gas companies to shutter production facilities in the Gulf of Mexico last week.
U.S. crude settled 44 cents higher at $79.58 a barrel, while London Brent crude gained 50 cents to settle at $79.47 a barrel.
Despite the inventory drawdowns, analysts said the EIA report showed demand in the world's top consumer remained weak, down 4.1 percent against last year for all refined products.
The financial crisis has battered fuel demand in developed economies, such as the United States, knocking crude from record highs near $150 a barrel in July 2008 to below $33 a barrel in December last year.
Optimism that an economic turnaround could push up demand has supported prices this year, with energy traders looking to economic data for signs of a rebound.
Data showed construction of new homes in the United States fell sharply last month, showing potential weakness in the economy's recovery, while consumer prices rose slightly more than expected.
U.S. travel and auto group AAA forecast 1.4 percent more Americans will travel this Thanksgiving holiday than last year as consumer sentiment improves.
Further support for crude came as the dollar slid against the euro, with fresh data doing little to alter the view that U.S. interest rates will remain at record lows well into 2010.
The dollar has fallen steadily for most of this year and hit a 15-month low this week, helping drive commodities higher as investors have sought hard assets to hedge against the depreciating currency.
(Additional reporting by Gene Ramos, Edward McAllister and Robert Gibbons in New York and Christopher Johnson and David Sheppard in London; Editing by Walter Bagley)
