Crude Oil Rises on Lower Inventories

Crude oil futures were rising Thursday after the government reported a drop in crude oil stockpiles.
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(Crude oil article updated with analyst commentary)

NEW YORK (

TheStreet

) -- Crude oil futures were rising Thursday after the government reported a drop in crude oil stockpiles. Prices were also boosted by positive economic data that showed a

greater-than-expected drop in weekly jobless claims

and a

narrower trade deficit

in July.

According to the Energy Information Administration, stockpile levels fell by 1.9 million barrels. The drawdown was more than the 730,000 barrel drop-off projected by analysts surveyed by Platts, but significantly lower from the industry's own bullish assessment. The American Petroleum Institute survey released late Wednesday said last week's crude supplies dropped by a whopping 7.3 million barrels.

Crude oil for October delivery was rising 1%, or 78 cents, to $75.45 on the Nymex.

Richard Ilczyszyn, senior market strategist at Lind-Waldock, said that oil prices are currently moving in lockstep with equities, but he expects a sell off after the hurricane season. "I will be bearish if equities remain weak," he said, adding that he felt crude prices were unlikely to head below $70 in the next couple of months. "It is difficult to put out a short position now when there is a wildcard in the Gulf. If there is a storm or hurricane...that could send prices up by $10."

The EIA report also showed gasoline inventories were relatively unchanged last week, dropping by 0.2 million barrels versus the Platts survey estimate of 0.82 million barrels. Distillates fell by 0.4 million barrels. Platts analysts were looking for a 0.94 million barrel buildup.

October heating oil futures were rising by a penny to $2.09 a gallon, while October gasoline futures also added a penny at $1.95 a gallon.

Oil stocks, already buoyed by the positive jobs report were rising following the report. The

NYSE Arca Oil Index

was up 0.8% and the

Philadelphia Oil Service Sector Index

rose 1.4%. Dow component

Exxon Mobil

(XOM) - Get Report

is rising nearly 1% to $61.34 and

Chevron

(CVX) - Get Report

is gaining 0.9% to $77.96. Oil equipment and services companies such as

Schlumberger

(SLB) - Get Report

and

Halliburton

(HAL) - Get Report

also gained about 1% each.

October natural gas futures slipped by 9 cents to $ 3.71 a gallon after the EIA reported that natural gas inventories saw an injection of 58 billion cubic feet last week, in line with the 56 to 60 billion cubic feet injection projected by Platts survey of analysts.

-- Written by by Shanthi Venkataraman in New York.

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