US crude futures surge $1.64/bbl on short covering

03 July 2013 20:32  [Source: ICIS news]

HOUSTON (ICIS)--NYMEX light sweet crude (WTI) for August delivery rose sharply for the third consecutive session, settling at $101.24/bbl, up $1.64, driven by aggressive short covering on fears of a potential crude shortage later in the year at the NYMEX contracts delivery point in Cushing, Oklahoma.

The weekly supply statistics from the Energy Information Administration (EIA) revealed a contrary-to-forecast drawdown in crude stocks of 10.3m bbl. Gasoline and distillate inventories also experienced a drawdown resulting in a strong rally across the energy complex.

Political unrest in Egypt, which could affect crude supplies in the region, also provided underlying support.

US stock indexes experienced a volatile short session, supported by a decline in US jobless claims and a rise in private employment but pressured by sluggish growth in the service sector.

Crude futures had been rangebound, trading within a wide price congestion but experienced a breakout after key technical barriers were penetrated. The August WTI contract topped out at $102.18/bbl, up $2.58, before the rally was capped and a portion of the gains were given back.

ICE Brent for August delivery established an intra-day high of $106.03/bbl and settled at $105.76/bbl, up $1.76.

By: Ignacio Sotolongo
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