Oil prices soar as inventories take a plunge

NEW YORK, JUNE 26: Oil prices soared Wednesday, causing a sympathetic upturn in oil shares, following news that nationwide inventories fe...

NEW YORK, JUNE 26: Oil prices soared Wednesday, causing a sympathetic upturn in oil shares, following news that nationwide inventories fell sharply last week, traders said. On the New York Mercantile Exchange NYMEX, oil for August delivery rose nearly four percent, or 70 cents, up on the day to 18.45 a barrel, coming after three days of losses.

The big rise was spurred by the closely-watched weekly data from the industry group American Petroleum Institute which showed that US crude stocks shrank by a huge 5.8 million barrels for the week ended June 18. That brought US crude stocks to 331.3 million barrels, down 7.2 million barrels from a year ago.

The drop came amid cuts in refinery runs due to poor margins and outages and analysts said refiners appeared to have bought less crude oil feedstock than they used. quot;The American Petroleum Institute inventory data triggered a shift in view of the market from one being in the midst of a downward correction to the correction phase being over,quot; said Tim Evans,senior analyst at Thomson Global Markets. The latest data overcame the market8217;s weakness that basically stemmed from a big increase in US crude stocks week before last.

On Wall Street, oil share prices gained, going against the general market trend, on the back of rising oil prices. It gave a bit of cheer to investors who had been worrying over lower second quarter corporate earnings estimates. quot;You8217;ve got stock market under pressure, and typically oil cuts against the grain,quot; said Michael Young, an analyst at Deutsche Bank.The Standard amp; Poor8217;s International Oil Index, which tracks oil majors, moved to the upside, gaining 1.32 percent or 12.44 points to 954.17. In comparison, the Dow Jones Industrials Average fell 0.51 percent or 54.77 points to 10666.86 on renewed interest-rate jitters. Among the oil sector winners were Chevron Corp 2.75 to 92.81; Mobil Corp 1.44 to 99.50, Exxon Corp up 0.94 to 78.13 and Phillips Petroleum 0.94 to 50.44. Other oil sectoral indices gained.

The Samp;P Oil amp; GasProducers Index rose 1.05 percent or 0.66 points to 63.49 while the Samp;P Oil amp; Gas Refining Index added 1.27 percent or 1.42 points to 110.10. Among the gainers were Apache Corp 0.63 to 36.88 and Kerr McGee Corp 0.81 to 50.75. Among refiners and marketers, the gainers included Amerada Hess 0.19 to 60.63, Tosco Corp 0.44 to 24.25 and Valero Energy Corp 0.44 to 19.44.