Oil jumped to a one-week high above $75 today after earnings euphoria injected positive sentiment into Asian equities, reinforcing overnight gains triggered by an industry report showing US crude inventories plunged last week.
The euro surged to a two-month high and Asian stocks climbed to their highest in more than a week after a bullish forecast from State Street a day earlier fuelled optimism about the coming US. earnings season and underpinned growing tolerance for risk, sending Wall Street higher.
US crude for August rose as much as $1.03 or 1.4 per cent to $75.10 a barrel, the highest intraday price since July 1st, and was up 69 cents at $74.76 on the New York Mercantile Exchange. ICE Brent crude for August rose 56 cents to $74.07.
Oil prices are still more than $12 away from a 19-month peak above $87 reached in early May, though they have rebounded by about $10 from a trough below $65 on May 20th.
Crude inventories in the United States tumbled by 7.3 million barrels last week, the American Petroleum Institute reported late on Wednesday, more than three times the expected drop.
Stockpiles fell after Hurricane Alex forced some producers in the US Gulf to curb production and Mexico to close loading terminals that send most of their output to US refiners.
A tropical depression formed over the northwestern Gulf of Mexico late yesterday, heading towards the Texas-Mexico border, a region still recovering from Alex, the US National Hurricane Center said.
A tropical storm warning was issued in the lower Rio Grande valley along the border, from south of Baffin Bay, Texas to Rio San Fernando, Mexico. The warning signaled the storm could make landfall within the next 24 hours. The expected course takes the weather system away from main oil-producing regions of the Gulf.
Government statistics on US oil inventories and demand from the Energy Information Administration follow the API data later today
Gasoline stocks fell 191,000 barrels, the API said, in line with analysts' projections, while distillates including heating oil and diesel fell 1 million barrels, contrary to a forecast for a 1.4 million-barrel gain.
Another serious storm in the Gulf of Mexico could further disrupt efforts to contain BP's massive oil spill off the Louisiana coast.
BP boss Tony Hayward met with an Abu Dhabi state investment fund yesterday, part of a quest for cash to ward off takeovers and help pay for the worst oil spill in US history.
Reuters