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Why the price of gas is going up
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South Boston resident Ned Havern expresses his concern as he fills his car
with gas in Dorchester Mass., Friday. (AP Photo/Eric Shelton)
U.S. crude oil inventories dropped unexpectedly last week by 4.4 million barrels, to 361.6 million barrels, according to the Energy Department's weekly data release on Wednesday.
In a separate report, the EIA revised its global forecast for oil demand in 2009 to be higher than previously expected, a reversal in direction for the short-term outlook since way back in September. Thursday the International Energy Agency also slightly raised its 2009 oil demand forecast. Both are based on an improving economy in the third and fourth quarters.
The weekly crude oil inventory decline was more than four times greater than what was expected by a Dow Jones Newswires survey of analysts. A major factor in the surprise: imports fell by 676,000 barrels per day.
Last fall OPEC agreed to take 4.2 million barrels per day out of the market, to shore up demand, which was negatively affected by the recession.
Compliance by the 12-member cartel -- which supplies 40 percent of the world's oil -- was at 77 percent in April, according to Bloomberg.
Gasoline stockpiles also declined, by 1.6 million barrels. The same Dow Jones survey had expected gasoline stockpiles to grow by 80,000 barrels. Refiners are producing less. Refinery capacity fell by 0.4 percent to 85.9 percent. The Dow Jones survey had anticipated a 0.5 percentage gain.
OPEC, in its own monthly report released Friday, as reported by the Financial Times, said: "As the world economy stablizes, the world oil demand appears to be settling down. Industrial production activities are steadying and in some parts of the world have even improved slightly...There are no significant downward revisions to our previous oil demand forecasts. Still, U.S. oil demand is the wild card and any further downward adjustment in the country's oil demand would have an impact on total world oil demand."
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