Inventory Drops, Prices Jump: Oil Alert

NEW YORK (TheStreet) -- A big crude inventory drop led to a big reversal for the price of oil today, as the price of oil soared after spending the early morning losing ground.

Crude futures were surging in the afternoon after a weekly Energy Department report said oil inventories fell by a whopping 8.4 million barrels for the week ended August 14th, bringing total inventories to 343.6 million barrels and surprising most analysts and oil watchers along the way.

Whether the data is showing a real uptick in energy demand is yet to be seen. The report still noted, for instance, that inventory totals remain more than 15% higher than last year's levels at this time.

But after the announcement, light, sweet crude for delivery in September raced up $2.52 to trade at $71.71 a barrel on the New York Mercantile Exchange. On Tuesday, the contract settled at $69.19 after putting on $2.44.

The report also showed that gasoline inventories fell by 2.1 million barrels and distillate fuel stocks came down by 700,000 barrels.

After the report, many energy stocks took their cue and rose in concert with oil futures. Shares of Chevron(CVX Quote) and ConocoPhillips(COP Quote) were up 2.1% and 1.6% each.

Meanwhile, Marathon Oil(MRO Quote) was putting on another 87 cents at $30.96 in the afternoon.