Forexpros – Crude oil futures added to gains in volatile trade on Wednesday, briefly topping USD99-a-barrel after government data showed U.S. crude supplies fell by the most since February 2001 last week to a two-year low.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD98.80 a barrel during U.S. morning trade, rallying 1.6%.
It earlier rose by as much as 1.97% to trade at USD99.23 a barrel, the highest since December 14.
Crude prices traded at USD98.14 prior to the release of the Energy Information Administration data.
Trading volumes were thin in many markets ahead of the Christmas holidays, resulting in volatile movements.
The U.S. EIA said in its weekly report that U.S. crude oil inventories dropped by 10.6 million barrels in the week ended December 16, blowing past expectations for a 2.4 million barrel decline. It was the largest weekly drawdown since February 2001.
Total U.S. crude oil inventories stood at 323.6 million barrels as of last week, the lowest level since December 2008.
Total motor gasoline inventories decreased by 0.4 million barrels, confounding expectations for a 1.0 million barrel increase, after rising by 3.8 million barrels in the preceding week.
Crude prices drew additional support from the possibility that sanctions over Iran’s nuclear program will disrupt supplies from the Middle Eastern country.
Iran is the world’s fourth largest oil producer, pumping nearly 5% of the world’s oil in 2010. The threat of a major supply disruption from the country has helped support oil prices in recent weeks.
Investors were also monitoring social unrest in Kazakhstan’s oil-rich western province after at least 15 people were killed in the state’s deadliest riots in decades. The country’s crude production is estimated at around 1.6 million barrels per day.
Crude prices were weaker earlier after the European Central Bank allotted EUR489.2 billion to 523 European lenders in its first offer of unlimited three-year loans earlier in the day.
However, the move failed to alleviate concerns over the financial crisis in the region as the scale of the operation indicated that European lenders believe that funding shortages were likely to continue into 2012.
Euro zone developments have dominated trading in the oil market for the last several months, amid worries that the sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery rose 0.93% to trade at USD107.72 a barrel, with the spread between the Brent and crude contracts standing at USD8.92 a barrel.
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