Oil futures jumped back over the $51 a barrel level Wednesday after the Energy Department reported an unexpected decline in weekly crude supplies.
July light sweet crude oil contracts were last trading up $1.58 at $51.25 a barrel on the New York Mercantile Exchange. Also on Nymex, unleaded gasoline futures were last up 1.4% at $1.447 a gallon and heating-oil futures were up 2% at $1.415 a gallon.
The Energy Department said crude inventories fell by 1.6 million barrels in the latest week, against expectations of a climb. Gasoline supplies rose by 0.6 million barrels, while distillate supplies were up by 1.9 million barrels.
Separately, the American Petroleum Institute said crude supplies climbed by 2.3 million barrels, but gasoline fell by 416,000 barrels. The API said distillate stocks rose by 2.5 million barrels.
Fimat was looking for a 1.2 million barrel increase in crude stocks, a 575,000 barrel build in distillate supplies and a 500,000 barrel addition to gasoline inventories.
Man Energy has broken away from consensus, and was expecting crude inventories to be flat to lower by 1.5 million barrels; a 200,000 to 1.2 million barrel increase in gasoline inventories; and an 800,000 to 1.8 million build in distillate supplies.
Analyst Ed Meir said a decline in crude build would lead to a "marked strengthening in prices, as the string of successive crude builds would be broken, and perhaps shift the market's short-term trading psychology a tad toward the bullish side."
Phil Flynn, senior market analyst at Alaron Trading, said he expects oil to hold above the $50 level through today's session as traders readjust their demand expectations following some strong economic data.
"We had soaring durable goods orders and strong new home sales, so all those fears of an economic slow down are just not bearing fruit," Mr. Flynn said. "People now have to adjust their estimates for demand for gasoline and all the other oil products."
On average, analysts expect the Energy Department on Thursday to report a build in natural-gas storage of 90 billion cubic feet for the week ended May 20. Fimat expects the data to show an addition of 88 billion cubic feet, while Enercast predicts it will be 92 billion cubic feet.
"This week's storage report is expected to have little influence on natural-gas prices, as markets still focus attention on crude and further out summer speculation," wrote Agbeli Ameko, managing director at Enercast, in a note to clients. "Near-term prices may stabilize as many end users recharge their stores and lock in future rates at this time."
In other commodity markets:
METALS: Traders remained in a cautious mood, unwilling for the most part to stake out positions that would indicate a broader move one way or another for the metals market. Gold for June delivery added 60 cents to stand at $418.30 an ounce on Nymex. July silver gained 7.2 cents,
or 1%, to $7.075 an ounce, as investors reacted to an annual survey issued by the Washington- based Silver Institute. Following on a three-day rally, July copper made fresh gains, rising 0.6 cent to $1.411 a pound. On the downside, July platinum fell $2.80 to $867 an ounce, while June palladium slipped 40 cents to $188 an ounce.--Mike Maynard