Oil prices were on the rise today after US inventories unexpectedly fell, while the US dollar remained weak.
American Petroleum Institute (API) said yesterday that US crude oil stockpiles shed 1.9 million barrels, falling the most since July.
A more closely watched report from the US Energy Department is due out later today.
The surprisingly large decline in inventories provided yet another boost for oil futures, which have been on the rise this week amid expectations of further quantitative easing (QE) by the US Federal Reserve.
Minutes from the latest meeting of the Federal Open Market Committee (FOMC) showed that the regulators were inclined to introduce more stimulus sooner rather than later. Several high ranking officials have voiced their support for more QE, citing the currently high unemployment rate of nearly 10% and a low inflation as concerns that warranted more stimulus.
It is anticipated that the Fed will print money and buy more government debt to bolster the apparently slowing recovery.
This would lead to an increased energy demand and higher inflation.
The increasing likelihood of more action by the government has kept the US dollar under pressure, which further supported the prices.
A weaker American currency makes dollar denominated commodities such as crude cheaper for holders of other currencies, lifting demand.
November Brent Crude rose to US$84.96/barrel, while US light, sweet crude for November delivery reached US$83.63/barrel on the New York Mercantile Exchange (NYMEX).
Blue chips oil and gas producers were in decline today. BP (LON:BP) shed 1.5%, while fellow supermajor Shell (LON:RDSB) posted a small loss, as did Cairn Energy (LON:CNE), Tullow Oil (LON:TLW) and BG Group (LON:BG).
Amec (LON:AMEC) was flat, while another oil and gas engineering firm Petrofac (LON:PFC) dropped 1.2%.
Midcaps were mixed. Melrose Resources (LON:MRS) was in the lead with a 1.4% climb. Heritage Oil (LON:HOIL) followed with a 1% gain and JKX Oil & Gas (LON:JKX) stood just above the opening level.
Salamander Energy (LON:SMDR) moved in the opposite direction, dipping 1.9%. Premier Oil (LON:PMO) declined 1%, while Dragon Oil (LON:DGO) and Soco International (LON:SIA) declined marginally.
Dana Petroleum (LON:DNX) was flat.
Services companies Wood Group (LON:WG) and Wellstream Holdings (LON:WSM) were little moved.
Energy sector focused investor Xtract (LON:XTR) was among the top risers in the sector with a 20% rally. US focused oil and gas company Nighthawk Energy (LON:HAWK) followed, advancing 7.5%.