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Oil jumps on drop in US crude stocks
NEW YORK---Oil prices rose more
than 3 per cent yesterday, bol-
stered by the biggest one-week
drop in US inventories so far this
year, and after Iraq and Algeria
joined Saudi Arabia in support-
ing an extension to OPEC supply
Some analysts questioned the stay-
ing power of the sharp price rebound,
given increased crude production in
the United States, along with OPEC
members Libya and Nigeria.
The US Energy Information Ad-
ministration said crude inventories
fell 5.2 million barrels last week,
much more than the 1.8 million-bar-
rel drop analysts predicted.
Gasoline and distillate stocks also
fell, supporting a market that has sold
off in recent weeks due to persistently
high US inventories.
Production rose, however, and
gasoline demand over the last four
weeks was 2.5 per cent lower than
at the same time period a year ago.
Global benchmark Brent crude
settled up US$1.49 a barrel, or 3 per
cent, to US$50.22 a barrel. US light
crude oil ended up US$1.45 higher
at US$47.33 a barrel.
"US crude oil production is now
solidly above 9.3 million barrels per
day with more to come, and refined
product, especially for gasoline, is
oddly weak," said John Kilduff, part-
ner at hedge fund Again Capital in
"It is difficult to see how the day's
Prices surged after the Organi-
zation of the Petroleum Exporting
Countries agreed in November with
some other producing countries to
curb supply. But oil slumped in re-
cent weeks as rising US production
undermined the OPEC-led efforts to
reduce a global crude glut.
Also supporting prices were com-
ments from Algeria's energy minister
that Algeria and Iraq favour extend-
ing global supply cuts when OPEC
meets this month.
On Monday, Saudi Arabia's oil
minister Khalid al-Falih said he ex-
pected the output deal to be extend-
ed to the end of the year or possibly
State-owned Saudi Aramco will
reduce oil supplies to Asian cus-
tomers by about 7 million barrels in
June. Aramco had previously main-
tained supplies to important Asian
"The reason why the bears have
been able to control this market is we
haven't seen the hard evidence; there
are a lot of doubting Thomases that
say there's been no drawdown," said
Phil Flynn, analyst at Price Futures
Group in Chicago.
OPEC member Libya said produc-
tion exceeded 800,000 barrels per
day (bpd) for the first time since 2014
and could rise to 1.2 million bpd later
Nigeria, which along with Libya is
exempt from OPEC cuts, is also ex-
pected to see a jump in output soon.
Energy companies rally
NEW YORK --- Energy companies jumped with
the price of oil yesterday, but overall, stocks
finished only slightly higher as a quiet week
of trading continued.
The price of US crude oil jumped 3 percent as
fuel stockpiles kept shrinking, and that made in-
vestors more optimistic about energy company
profits. Strong earnings from video game mak-
er Electronic Arts and chipmaker Nvidia helped
technology stocks move up. However weak results
from Priceline and Disney hurt consumer-focused
companies, and health care stocks also stumbled
as drug companies fell.
Investors didn't react much to President Donald
Trump's surprise decision to fire FBI Director James
Comey on Tuesday evening. U.S. stocks also had
little reaction to the French presidential election
last weekend, although European indexes climbed
following the win by centrist candidate Emmanuel
"It's almost as if the market has become numb,"
said Julian Emanuel, an equity strategist for UBS.
"Investors are interpreting this as more noise."
The Standard & Poor's 500 index picked up 2.71
points, or 0.1 per cent, to 2,399.63, a fraction of a
point above the all-time high it set Monday. The
Dow Jones industrial average shed 32.67 points,
or 0.2 per cent, to 20,943.11 as Disney and Boeing
slumped. The Nasdaq composite finished at a record
for the fourth day in a row as it rose 8.56 points, or
0.1 per cent, to 6,129.14. The Russell 2000 index
of small-company stocks was up 7.73 points, or
0.6 per cent, to 1,399.59.
Oil prices made big gains as reports showed US
crude stockpiles dropped by 5.2 million barrels last
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