EIA Reports Lower Than Expected Increase in Supplies Data

Energy Information Administration released its inventories report on Wednesday according to which crude oil inventories increased by 800,000 barrels for the week ending March 2nd, 2012 as compared to analysts’ expected increase of 2 million barrels.

EIA also reported decrease of 400,000 barrels in gasoline stockpiles while analysts were expecting gasoline supplies to fall by 1.75 million barrels. Distillates supplies which include diesel and heating oil for the week declined by 1.9 million barrels as compared to analysts’ expected decline of 1.5 million barrels.

Lower supplies data created more demand for oil as the crude oil futures contract for April delivery gained 1.4 percent or $1.46 to settle at $106.16 per barrel on the New York Mercantile Exchange.

Other than weaker dollar the latest indication from US Federal Reserve for a new bond buying program also created more demand for commodities. According to Wall Street Journal, the feds are thinking to purchase Treasury or mortgage bonds and then borrow it back for short term periods at low rates. Analysts think that his measure is being thought of in reaction to the criticism of quantitative easing as being highly inflationary.

Among other commodities, gasoline futures contract for April delivery gained 1.8 percent or $0.06 to settle at $3.29 per gallon. Heating oil futures for the same month delivery surged 1 percent or $0.03 to settle at $3.22 per gallon.

Natural gas futures contract for April delivery fell 2.3 percent or $0.05 to $2.30 per million British thermal units.

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