Oil rises 2.4 percent on inventory draws

By Robert Gibbons

NEW YORK (BestGrowthStock) – U.S. crude oil futures rose more than 2 percent on Thursday, supported by much lower than expected crude and gasoline inventory data as the beginning of the summer driving season spurred gasoline demand.

U.S. crude for July settled at $74.61 a barrel, up $1.75. In London, ICE Brent rose $1.66 to settle at $75.32 a barrel.

“The draws in gasoline and crude really stand out right away, which helps boost that market right back up above $73 a barrel,” Tradition Energy analyst Gene McGillian said. “The real question will come here whether we can get through that resistance level of $74.50 to $75 a barrel.”

Crude futures staged a rally after the U.S. Energy Information Administration said crude inventories fell by 1.9 million barrels last week, far more than the consensus expectation for a 100,000-barrel dip.

Gasoline inventories also fell sharply, sliding 2.6 million barrels, the EIA said. Expectations were for a 500,000-barrel fall. Distillates rose slightly more than expected and refinery capacity use fell.

Data from the EIA showed inventories at the U.S. crude oil hub at Cushing, Oklahoma, rose last week to match a record reached two weeks ago, while industry data provider Genscape said supplies were little changed in the week to June 1.

Earlier in the session, rising inventories at Cushing weighed on the front end of the futures curve, after the previous report showed a stockpile slip.

Despite the supportive inventory data, there were signs that global supply was on the rise.

Seaborne oil exports by OPEC, excluding Angola and Ecuador, will rise in the four weeks to June 19, according to Oil Movements, a UK consultancy that tracks future shipments.

Compliance by members of the Organization of the Petroleum Exporting Countries with promised cutbacks has fallen to 51 percent, according to Reuters estimates.

VOLATILE WEEK

The U.S. dollar firming against the euro limited oil’s rise.

The dollar’s rise was being attributed to bets for stronger U.S. monthly payroll data on Friday, which would indicate a growing economy and bode well for energy demand. Economists polled by Reuters expected U.S. non-farm payrolls to show the creation of 500,000 jobs.

Dollar strength makes dollar-priced commodities more expensive for holders of other currencies and can redirect investment into foreign exchange trading.

U.S. equities ended higher after seesawing, led by a late-day surge in technology shares as investors geared up for a strong jobs report on Friday. (.N: )

Graphic http://link.reuters.com/ruv97k

Concern about a slowdown in China’s economic growth had weighed on oil prices this week, hitting sentiment already battered by Europe’s debt crisis.

After collapsing by more than 20 percent from a 2010 high above $87 a barrel in early May, oil prices have found support in the region of $70 to $74, torn between evidence that the world’s biggest oil-consuming nations are posting steady growth in demand and speculation that consumption will be hurt by a stagnant European economy.

“Crude demand will ease slightly ahead of the seasonal pick-up in the second half of this year, but we remain confident it will still grow strongly in 2010,” VTB Capital analyst Andrey Kryuchenkov said.

Stock Market Today

(Additional reporting by the New York Energy Desk, David Sheppard in London and Alejandro Barbajosa in Singapore; Editing by David Gregorio)

Oil rises 2.4 percent on inventory draws