Commodities: Crude hit by reduction in petroleum inventories

Date: Friday 25 Nov 2011

Crude oil prices were hit on Thursday by news that petroleum inventories had suffered an unexpected reduction in crude stockpiles.

Crude inventories declined by 6.2m barrels last week, while gasoline inventories soared by 4.5m barrels, according to the Energy Information Administration.

The January contract fell 1.97% to settle at $97.03 a barrel. Floor trading was closed for the Thanksgiving bank holiday.

Metals were also falling, with the electronic price for gold settling at $1,695.5 per troy ounce on its December contract, and silver falling 3.11% to end at $31.84 per troy ounce on its contract for the same month.

And it was good news from Germany after the IFO Institute´s German business confidence index for the month of November has come in at 106.6 points compared to 106.4 for the previous month.

The market was expecting the sentiment barometer to fall to 105.5.

Meanwhile, the well respected CBI industrial trends survey showed a collapse in export orders for UK manufacturing firms.

Of the 446 companies who responded to the survey only 11% reported export order books to be above normal, while 42% said that they were below. The resulting survey balance (-31%) is the lowest since January 2010.

Elsewhere, it has been rumoured that the European Central Bank (ECB) could be considering new two- and three-year liquidity operations amid concerns of a new credit crunch.

The longest term for loans that the ECB currently offers banks is just 12 months and the new measure would be aimed at increasing liquidity in the interbank market.

NR

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