EIA Reports Surprise Decrease in Crude Oil Inventories

Energy Information Administration released its latest inventories data on Wednesday for the week ended November 4th, 2011. As per latest report of EIA, crude oil inventories fell 1.4 million barrels for the respective week while analysts expected crude oil stockpiles to increase by 1 million barrels.

Gasoline stockpiles declined 2.1 million barrels as compared to expected decline of 400,000 barrels for the week. Distillates which include heating oil and diesel fell 6 million barrels while analysts expected the distillates inventories to decrease by 2.5 million barrels.

Tahir Zahir from Tyche Capital Advisors commented, “The report was a surprise, while crude has seen an upswing in the past few sessions it has encountered resistance at the 200-day moving average above ($97 a barrel),”

Crude oil futures contract for December delivery fell 1.1 percent or $1.10 to settle at $95.74 per barrel on the New York Mercantile Exchange.

Gasoline futures for the same month delivery fell 2.3 percent or $0.06 to $2.64 per gallon. Heating oil futures contract for December delivery slipped 0.6 percent or $0.02 to settle at $3.10 per gallon.  Natural gas futures contract for December also dropped 2.4 percent or $0.09 to $3.65 per million British thermal units.

Stronger US dollar was the main reason behind the drop in crude oil futures and other commodities. Greenback is negatively correlated with commodities as it makes commodities cheaper for holders in foreign currencies.

The dollar index DXY which measures the US dollar’s performance against its major counterparts gained to 77.915 on Wednesday as compared to 76.620 on Tuesday’s North American trading session.


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