Oil Rebounds From Four-Week Low After Surprise Drop in U.S. Crude Supplies

Oil rose, rebounding from a four- week low, after a U.S. government report unexpectedly showed crude inventories fell the most since August 2009, boosting optimism of an increase in fuel demand.

Futures retraced some of yesterday’s 2.3 percent slump, snapping four days of declines, after the Energy Department said stockpiles dropped 7.3 million barrels to 357.6 million last week. They were forecast to be unchanged, according to a Bloomberg News survey of analysts. Gasoline and distillate supplies also decreased.

“U.S. crude supplies unexpectedly plunged,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, wrote in a note today. “Crude product inventories also declined, painting a positive picture for U.S. consumption.”

The December contract advanced as much as 56 cents, or 0.7 percent, to $81 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $80.84 at 9:17 a.m. Singapore time. Yesterday, it lost $1.90 to $80.44, the lowest settlement since Oct. 19. Prices have fallen 4.8 this week and gained 2 percent this year.

“It could be that consumption is improving,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “It seems to be the start of a trend.”

Fuel Supplies

Gasoline inventories slipped 2.66 million barrels to 207.7 million, the lowest level since the week ended Oct. 16, 2009, the Energy Department report showed. They were projected to slide 750,000 barrels, according to the Bloomberg News survey.

Stockpiles of distillate fuel, a category that includes heating oil and diesel, fell 1.11 million barrels to 158.8 million. They were forecast to decline 2 million barrels. The Energy Department report showed imports tumbled 2.8 percent to 7.86 million barrels a day, the lowest level since December.

Crude oil slumped yesterday amid speculation that China, the world’s biggest energy-consuming country, will raise interest rates. Prices also dropped on concern Europe’s debt crisis is worsening.

Brent crude for January settlement decreased 46 cents, or 0.6 percent, to $83.74 a barrel on the London-based ICE Futures Europe exchange.