Crude-oil futures settled at their highest in more than two years Wednesday, defying a rising dollar as a U.S. government report showed a larger-than-expected drop in inventories.
Crude for December delivery added $1.09, or 1.3%, to $87.81 a barrel on the New York Mercantile Exchange. That’s oil’s best settlement since early October 2008.
The contract had traded lower just moments before the Energy Information Administration released its update on U.S. petroleum inventories as the dollar continued to rise.
A surprise decline in crude stockpiles for last week brought prices back into positive territory.
The government reported a decline of 3.3 million barrels in the nation’s crude-oil supplies in the week ended Nov. 5. Gasoline stockpiles fell 1.9 million barrels and distillates dropped by 5 million barrels, the Energy Information Administration said.
The update ran counter to analyst expectations of an increase for crude inventories and smaller declines for petroleum products supplies.
Analysts polled by Platts had expected an increase of 2.1 million barrels in stockpiles of crude, while gasoline was seen dropping 1.3 million barrels and distillates were forecast to decline 2 million barrels.
The government’s drawdown of 3.3 million barrels for crude came in smaller than the 7.4 million barrels estimated by the American Petroleum Institute late Tuesday.
Consider this chart:
The lower 80s provided strong resistance for oil prices for the last three months. But over the last week, prices have moved through this important area of resistance. In addition, the EMAs indicate the short and intermediate trends are bullish which is confirmed by the MACD.
Because of oil's central nature to the economy, this is a very important development that needs to be watched closely.