Oil recovered from yesterday’s falls due to movements in the currency markets with the US dollar sliding against the euro on comments from European Central Bank (ECB) president Jean-Claude Trichet, who said that Greece did not need an immediate bailout, while Italy would not face a sovereign debt crisis like that in Greece.
Crude prices have been under pressure from increases in US oil inventories, which were reported earlier this week.
According to Wednesday’s data from Energy Information Administration (EIA), US crude stockpiles added 2 mmbbls (million barrels) last week, signalling weaker demand. Gasoline inventories and distillates, which include heating oil and diesel, fell by 2.5 mmbbls and 1.1 mmbbls respectively.
On Tuesday, the American Petroleum Institute (API) said that oil stockpiles added 1.1 mmbbls, while gasoline inventories shed 2.9 mmbbls and distillates were down 1.5 mmbbls.
Recent gains in global equity markets improved the demand outlook for crude, helping it to 18 month highs at over US$87/barrel.
Today, May Brent Crude improved to US$85.43/barrel, while US light, sweet crude rose to US$85.92/barrel on the New York Mercantile Exchange (NYMEX).
Tullow Oil (LSE: TLW) was in the lead with a 1.8% climb. Shell (LSE: RDSB) added 1.3%, while fellow supermajor BP (LSE: BP) tacked on nearly 1%, as did Cairn Energy (LSE: CNE).
BG Group (LSE: BG) was flat.
Amec (LSE: AMEC) climbed 1.2%, while another oil and gas engineering company Petrofac (LSE: PFC) added less than 1%.
Midcaps were mixed. Heritage Oil (LSE: HOIL) and Premier Oil (LSE: PMO) outperformed their peers, climbing 3%. Soco International (LSE: SIA) and Dana Petroleum (LSE: DNX) added slightly more than 1%, while JKX Oil & Gas (LSE: JKX) posted a small gain. Dragon Oil (LSE: DGO) was flat, while Melrose Resources (LSE: MRS) and Salamander Energy (LSE: SMDR) were in decline, shedding 2.2%.
Services companies also headed in different direction as while Wood Group (LSE: WG) advanced 1.6%, Wellstream Holdings dropped 1.4%.
US focused oil and gas junior Caza Oil & Gas (AIM: CAZA) was among the top performers in the sector with a 6% gain. Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) headed in the opposite direction, slipping 6% on no news.