Asian oil prices rose to near $77 per barrel as US crude oil supplies dropped last week, indicating a strengthening of oil demand.
Prices for crude oil delivery in November rose by 41 cents to hit $76.59 per barrel on electronic trading at the New York Mercantile Exchange; however the contract settled with a 34 cent loss at $76.18 per barrel come Tuesday. In Europe crude rose as well, with the ICE Futures exchange reporting a rise of 47 cents to tip $79.18 a barrel.
The American Petroleum Institute listed crude inventories had fallen 2.4 million barrels last week, contrary to analysts predictions of an increase in inventories of around 2.2 million barrels. According to the API, gasoline inventories rose, while other distillates fell during the week.
High crude oil prices have taken their toll on US oil prices, as consumption remains slow in the US amid an uneven and sluggish economic recovery over the year. However some analysts predict that prices will increase for some commodities like crude out, which may well outperform other investments in the future.
In a recent report, Bank of America Merill Lynch said: “Investors currently struggle with the risks of deflation, low growth and extremely easy monetary policy in developed economies. We believe bonds and commodities represented far better investments than real estate and equities."
The US Energy Department report of weekly supply data from the Energy Information Administration is expected to be released later today, with most analysts focusing on a confirmation of strengthened demand from the report.
