Oil Prices Rally on Drop in Inventories

Inventory data released by the EIA today showed a surprise decrease in U.S. crude inventories last week.  Crude stocks shrank by 200,000 barrels, contrary to analysts’ expectations of a 3 million barrel increase.  Distillate inventories fell by 800,000 barrels, a smaller drop than expected, Reuters reported.

Oil prices reacted to the reported supply decreases by moving upward.  The price of crude had risen 7.2 percent to $37.09 a barrel and the price of heating oil had gained  2.8 percent at 12:03 pm eastern time.  While evidence of a global economic slowdown continues to mount, oil experts expect a substantial rise in oil prices in the near to medium term, as global energy demand is expected to grow rapidly.

Today is the final trading day on NYMEX for the March 2009 crude contract.  The price of crude will shoot up to the $39 a barrel range tomorrow when April 2009 takes over front month status.

HEAT USA price experts confirmed the expected decrease in retail heating oil prices today.

HEAT USA Price Report
Today’s average retail heating oil price per gallon: DOWN $0.03 to $0.04
Morning projection (for Friday’s average price per gallon): UP $0.02