Oil prices rise as supplies fall below estimate

CRUDE oil prices rose for a second day after the Energy Department said stockpiles fell more than expected and petroleum demand rose to a nine-month high.Oil for September delivery rose $1.18, or 1.3 per cent, to $94.61 a barrel at 1:32 p.m. on the New York Mercantile Exchange. The price was $92.90 before the report was released at 10:30 a.m. Oil has rallied 22 per cent from this year's settlement low of $77.69 on June 28.Brent crude for September settlement, which expires today, rose $2.21, or 1.9 per cent, to $116.24 on the London- based ICE Futures Europe exchange. The more-active October contract gained $2.15, or 1.9 per cent, to $114.30.Futures gained as much as 1.3 per cent as supplies dropped 3.7 million barrels in the seven days ended August 10, more than twice the decrease forecast by analysts polled by Bloomberg, and total oil use exceeded 20 million barrels a day. Oil also advanced on concern Middle East tension will disrupt supplies.'The bigger-than-expected draw in crude is the primary driver of the price,' said Kyle Cooper, director of commodities research at IAF Advisors in Houston. 'Petroleum demand was reported over 20 million barrels a day for the first time this year, which is also important. Overall, it's a bullish report.''We are seeing some of the biggest, strongest demand for oil in almost a year,' said Carl Larry, president of Oil Outlooks & Opinions LLC in New York. 'It's a significant jump, and that's where a lot of this oil draw comes from.'Gasoline stockpiles fell 2.37 million barrels to 203.7 million. The forecast was a decrease of two million barrels. Distillate supplies, which include heating oil and diesel, rose 677,000 to 124.2 million versus an expected decline of 275,000. The refinery utilisation rate was unchanged at 92.6 per cent.'The crude draw is bigger than expected so you would expect a little bit of a bullish reaction and that's what we've got,' said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.Oil has advanced more than seven per cent in August, helped by concern that Middle East tension will disrupt supplies from a region responsible for about one-third of the world's oil production.
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