Thursday February 19, 05:22 PM
Oil prices rally after surprise drop in US crude stocks
LONDON (AFP) - World oil prices rallied Thursday as traders reacted to a shock fall in US crude inventories which signalled a possible turnaround in American energy demand, analysts said.
New York's main futures contract, light sweet crude for delivery in March, won 2.69 dollars to 37.31 dollars per barrel.
Brent North Sea crude for April delivery added 1.56 dollars to 41.11 dollars a barrel.
The US government's Energy Information Administration (EIA) said Thursday that American crude stockpiles fell 200,000 barrels in the week to February 13.
News of the first weekly drop since December wrong-footed the market because market expectations had been for a gain of 2.7 million barrels, according to Dow Jones Newswires.
The EIA added that US gasoline or petrol reserves increased by 1.1 million barrels last week. Analysts' forecasts had been for a 600,000-barrel drop.
Stockpiles of distillates, including diesel and heating fuel, slid 800,000 barrels, roughly in line with market expectations.
The EIA report -- published one day later than normal due to a US public holiday on Monday -- is a key focus because the United States is the world's biggest energy consuming nation and is currently mired in a recession.
"This report .. could easily be overshadowed by fresh economic headlines," said Jim Ritterbusch, president of the trading advisory firm Ritterbusch & Associates.
Oil prices have slumped from record highs above 147 dollars a barrel reached last July, as the market has been hit by plunging energy demand because of the global economic slowdown.
The Federal Reserve had forecast Wednesday the US economy would shrink in 2009 and for the first time moved toward a long-range inflation goal in a bid to clarify monetary policy.
The Fed said it expects the world's largest economy to contract 0.5 to 1.3 percent this year and anticipated an "unusually" prolonged recovery, according to the minutes of a Federal Open Market Committee (FOMC) meeting in January.
Unemployment in 2009 was forecast to rise from 8.5 to 8.8 percent and gradually fall as low as 6.7 in 2011.
Oil prices remain vulnerable to weak economic data amid the ongoing worldwide slowdown, agreed Sucden Financial analyst Brenda Sullivan.
"Risk remains for price vulnerability on disappointing news from the economic arena," she added.
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