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Crude gains as U.S. stockpiles drop more than expected

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Shutterstock photo - Crude oil futures rose on Friday after official data revealed that the country's inventories fell more than expected last week.

Uncertainty as to when the Federal Reserve may wind down its stimulus programs kept the growth-sensitive commodity's gains in check.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD92.96 a barrel on Friday, up 0.04%, off from a session high of USD93.10 and up from an earlier session low of USD91.55.

In a report, Energy Information Administration said that U.S. crude oil inventories fell by 11.12 million barrels last week, well above market calls for a decrease of 919,000 barrels, which pushed up prices on sentiment demand for fuels an energy may be stronger than once thought.

Elsewhere, jobs data came in stronger than expected in the U.S. though uncertainty over the Federal Reserve's plans to wind down stimulus tools dampened the rally.

In the U.S. earlier, the Bureau of Labor Statistics reported the U.S. economy added 155,000 nonfarm payrolls in December, beating market calls for the economy to create 150,000 new jobs.

In addition, the U.S. employment rate remained unchanged at 7.8% last month, though markets had hoped for a decline to 7.7%.

Meanwhile, the Bureau of Labor Statistics revised October's figures to 137,000 from 138,000 new jobs and hiked November's figure to 161,000 from 146,000.

Elsewhere, service-sector data came in better than expected in the U.S. as well.

The U.S. Institute of Supply Management reported earlier that its non-manufacturing index improved to 56.1 in December from 54.7 in November, beating expectations for a rise to 54.2.

In the eurozone, preliminary data revealed that inflation came in stronger than expected last month, which was also bullish for crude.

The currency zone's consumer price index remained unchanged at an annualized rate of 2.2% in December, outpacing market calls for the index to tick down to 2.1% in December.

Oil, however, jumped in and out of positive territory due to market sentiments that U.S. central bankers may be grouping off into different camps when it comes to deciding when a USD85 million monthly bond-buying program designed to stimulate the economy should wind down.

"A few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases," the Fed said in the minutes of its December monetary policy meeting released this week.

"Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted."

The bond-buying program, known technically as quantitative easing but dubbed by many as printing money out of thin air, weakens the U.S. dollar and pumps up stock and commodity prices by flooding the economy with liquidity.

Some saw the comments as a sign the Fed may wind down stimulus programs to prevent inflationary pressures from building, slowing recovery and strengthening the dollar in the process, which could pressure oil prices downward.

Meanwhile on the ICE Futures Exchange, Brent oil futures for February delivery were down 0.83% at USD111.20 a barrel, up USD18.24 from its U.S. counterpart. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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