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Crude up as US oil stocks fall


Sydney : Crude-oil futures hit a six-month high in Asia late Wednesday, after a report showed a sharp fall in US oil stockpiles as traders bet on the size and scope of widely predicted second round of quantitative easing from the US central bank, Dow Jones reported.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at $84.31 a barrel at 0720 GMT, up 41 cents in the Globex electronic session.

The front-month contract hit a new six-month high of $84.50 a barrel early in the trading day, surpassing the previous mark of $84.47 a barrel set overnight.

December Brent crude on London’s ICE Futures exchange rose 34 cents to $85.75 a barrel.

Traders were taking positions ahead of weekly petroleum data from the US Energy Information Administration, due 1430 GMT Wednesday, hoping they would confirm a sharp drop in crude oil, gasoline and diesel inventories.

The American Petroleum Institute late Tuesday said crude stockpiles fell 4.1 million barrels during the week ended Oct. 29.

That was in contrast to the average 800,000 barrel-rise predicted by 13 analysts polled by Dow Jones Newswires.

Gasoline inventories dropped 3.2 million barrels, while distillate stocks fell 4.7 million barrels, the API said. Refinery use was unchanged.

‘Taken together, those are the strongest API implied demand figures seen yet this year. They add to the already bullish factors that pushed quotes higher on Tuesday,’ said Peter Beutel of oil trading advisory firm Cameron Hanover.

Traders were also counting down to the end of the Federal Reserve’s policy meeting later in the global day, and closely watching the results of the US midterm elections.

Jim Ritterbusch, president of oil trading advisory firm Ritterbusch & Associates, said oil markets appeared to be ‘borrowing’ from the expected strength of prices after the Fed unveils its latest program to stimulate the US economy.

‘We are viewing much of this week’s price strength as a discounting process that could temper bullish response’ to the Fed’s announcement, Ritterbusch said.

This helps explain why markets were prepared to overlook a modest strengthening in the US dollar during Asian trading, with the euro weakening to $1.4011 from $1.4025 at the start of the day. A stronger dollar often weakens the price of oil because it makes crude more expensive in foreign currencies.

Nymex reformulated gasoline blendstock for December–the benchmark gasoline contract–rose 76 points to $2.1172 a gallon, while December heating oil traded at $2.3041, 105 points higher.

ICE gasoil for November changed hands at $718.50 a metric ton, up $2.25 from Tuesday’s settlement.