LONDON, 30 November 2006 — Oil rose to a two-month high over $62 a barrel yesterday after US inventory data showed unexpected declines in stocks of winter fuel just as colder temperatures were expected in the world’s top energy market.
US light crude rose $1.23, or 2 percent, to $62.21 a barrel by 1735 GMT, after hitting the highest level since Oct. 2 at $62.35. London Brent crude traded $1.55 higher at $62.71 a barrel.
US government data showed US distillate stocks, including heating oil, had fallen by 1 million barrels. Forecasters had predicted a 400,000-barrel increase. “The market is reacting bullishly to the distillate stock draw,” said Phil Flynn, analyst at Alaron Trading, Chicago.
“Distillates are moving in the wrong direction as they should be rising, not falling, at this time.”
Gasoline stocks also fell by 600,000 barrels countering expectations of a half-a-million barrel rise, while crude stocks declined by 300,000 barrels, compared with forecasts for a 100,000-barrel fall.
Prices had already been rallying before the US data as a combination of technical strength and forecasts of colder weather helped to drive the market.
Private forecaster AccuWeather said cold weather would hit the US East Coast by the weekend, ending a stretch of above-normal temperatures that have curbed fuel demand.
Kuwait’s Oil Minister Ali Al-Jarrah Al-Sabah told Reuters yesterday current US crude prices were “very comfortable” and further output cuts would be needed only if prices fell sharply. “In my personal opinion, if prices maintain these levels, I don’t imagine that there is a need for a reduction,” he said.