Data Points Lift Crude

Published on Wednesday, 27 June 2012 17:50 Written by Todd Shriber

Thanks to some decent economic and inventory data points, for a change, oil futures climbed to their highest levels in a week on Wednesday. NYMEX-traded crude for August delivery added 85 cents, or 1.1%, to close at $80.21 per barrel. In London, Brent crude rose 46 cents, or 0.5%, to settle at $93.48 a barrel. Oil posted gains despite the fact that the PowerShares DB US Dollar Index Bullish (NYSE: UUP) closed higher by nearly a third of a percent.

The Energy Information Administration said oil inventories shrank by 100,000 barrels last week, falling back from a 22-year high. Declining inventories imply increased demand here in the U.S. and that is essential to any upside momentum oil bulls are hoping to build because the U.S. is still the world’s largest oil consumer.

In economic news, the Commerce Department said durable goods orders rose 1.1% in May, good for the first increase since February. The National Association of Realtors said pending home sales jumped 5.9% in May following a 5.5% drop in April. Analysts expected a May increase of 1%-2%.

Norway’s ongoing oil strike is also being viewed by some traders as a near-term catalyst for higher prices. The strike has shut down 240,000 barrels a day, or 15% of the country's oil production, according to the country's Oil Industry Association, the Wall Street Journal reported. Roughly 700 Norwegian oil workers are on strike with the issue at hand pertaining to a pension agreement.

With stocks bouncing higher, most oil equities finished in the green. Exxon Mobil (NYSE: XOM) added almost 1% while Chevron (NYSE: CVX) climbed by 1.6%. Brazil’s Petrobras was once again one of the sector’s laggard. That stock fell another 1.4% to touch a new 52-week low despite the company saying its oil and natural gas output increased 1.9% in May to an average of 2.6 million barrels per day. Oil production alone was nearly 2 million barrels per day.

Earlier this month, Petrobras (NYSE: PBR) pledged to reduce its $237 billion five-year spending program, but the stock has been hammered by the company’s 11% reduction to its 2020 production forecast.

A study by research firm Wood Mackenzie showed oil majors BP (NYSE: BP), Royal Dutch Shell (NYSE: RDS-A), Total (NYSE: TOT), Eni (NYSE: E), Exxon, Chevron and ConocoPhillips (NYSE: COP) will increase production from 8 billion barrels of oil equivalent per year now to 10 billion by the end of this decade, according to Reuters. Those companies combine for about 30% of global production.