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Crude Gains 2% on Inventory Drawdown

Stocks in this article: XOM CVX

NEW YORK ( TheStreet) -- Crude oil inventories unexpectedly dropped, providing a nice lift to energy futures on Wednesday, which were also helped by a weaker U.S. dollar.

Crude oil stockpiles fell for the first time in 11 weeks, according to Jeff Mower, chief editor of the Platts Oilgram Price Report. The Energy Information Administration reported a 2.2 million-barrel decline in crude stockpiles for the week ending April 9, dashing expectations for a build of 1.6 million barrels, according to a Platts survey of analysts. The industry's own American Petroleum Institute suggested a build late Tuesday, when the group reported its own tallies showing a 1.41 million barrel increase last week.

Gasoline supplies, which fell by 1.1 million barrels according to the report, were forecast to fall by 1.26 million barrels. Distillate fuels rose by 1.1 million barrels last week, landing more or less in line with expectations calling for a 1 million barrel build.

The May delivery crude contract, which was trading slightly higher before the report, watched its gains accelerate after the release. It hit a daily high of $86.39 but settled at $85.84, gaining $1.79, or 2.1%. May heating oil added 3 cents, or 1.3%, to settle at $2.24 a gallon, while May gasoline rose 2 cents higher, or 1%, to settle at $2.33 a gallon.

A weaker dollar and bullish economic news also contributed to higher energy prices. The dollar index, which measures the greenback against a collection of global currencies, fell 0.3%.

The Dow Jones Industrial Average finished the trading session with triple-digit gains and the S&P 500 closed above the 1200 level for the first time since September 2008. Equities rose on better-than-expected earnings from Intel (INTC) and JPMorgan Chase (JPM) along with a surge in March retail sales .

Major energy stocks gained on the surprise drop in crude supplies. The NYSE Arca Oil index increased 1.1% and the Philadelphia Oil Service Sector index advanced 2.2%.

On the Dow, Chevron (CVX) was added 37 cents, or 0.5%, to $80.58, though Exxon Mobil (XOM) shed 5 cents, or 0.07%, to $68.61.

Also on the Nymex, the natural gas contract for May delivery finished the session 4 cents higher, or up by 0.9%, to $4.20 per million British thermal units. On Thursday morning, the EIA releases its weekly storage level report. Analysts polled by Platts are expecting an increase of 76 to 80 billion cubic feet.

-- Written by Sung Moss and Melinda Peer in New York.

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