Futures for West Texas Intermediate crude oil rose back over the $100 mark on Friday for the first time since October 21 as ongoing unrest in Africa saps suppy and a report showed that U.S. stockpiles decreased more than expected.
The U.S. Energy Information Administration said that inventories declined by 4.7 million barrels in the week ended December 20, exceeded the drop of 2.3 million barrels that analysts forecast. It was the fourth consecutive week of declining oil inventories.
Gasoline inventories confounded analysts by falling by 600,000 barrels, instead of rising by 1.2 million barrels as expected. Distillate fuel stockpiles were lower by 1.9 million barrels, versus the 500,000-barrel contraction analysts predicted.
Unrest in Africa Weighs on Supply
Earlier this week, Libya’s Ministry of Oil and Gas said that the country was only producing an average of 233,889 barrels of oil per day up to December 21. Libyan oil production was averaging 1.5 million barrels of oil per day in July. The ongoing problem for the North African country has been protesters with political and financial demands causing production disruptions, power outages and the closing of key oil ports. The largest portion of protestors at oil refineries and ports are crying for federalism, although others are demanding employment and still others are fighting for unrecognized languages to be added to the constitution.
Prime Minister Ali Zeidan has been battling a plethora of small groups with different demands for two years and was optimistic to have all the ports back open this month, but to no avail.
To the southeast, violence in South Sudan is escalating, stoking production concerns about African oil. South Sudan produces about 250,000 barrels of oil per day, which is not a lot compared to other producing nations. When viewed in combination with the turmoil in Libya, though, it’s enough to spur concerns about oil output from the continent and drive oil higher.
Upbeat U.S. Economic Data
Although it’s been a light week for reports on the health of the U.S. economy, a report on the labor market painted a rosier picture for future energy demand. The Labor Department said Thursday that initial jobless claims fell by 42,000 in the week ended December 21, easily outpacing expectations of economists. It was the biggest one-week drop in 13 months, even though economists noted that this time of year is especially volatile because of the holidays making it difficult for the agency to make seasonal adjustments.
A Great Month of December
Just as December has been a strong month for equities, it’s been great to oil bulls as well. Oil for February delivery entered the month at $93 per barrel and has risen about 8 percent through Friday afternoon trading at $100.52 (up 1 percent for the day).
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