Oil rises on declining inventories, positive data
Crude prices rose for the third consecutive day on Wednesday as U.S. crude inventories declined sharply, stronger-than-expected U.S. existing home sales lifted market sentiment and the European Central Bank started to offer three-year loans to eurozone financial system, Xinhua reported.
U.S. Energy Information Administration reported that U.S. crude inventories decreased sharply by 10.6 million barrels in the week ending Dec. 16 as a result of tumbling import and production slowdown. Domestic supply decline pushed WTI up.
Meanwhile, U.S. existing home sales for November surged 4.0 percent from October, hitting a 10-month high, adding more positive signs as the recovery of U.S. house markets was picking up momentum.
More importantly, the ECB offered first ever three-year loans to eurozone banks with an amount of 489 billion euros, far more than economists' estimate of 293 billion euros. The ECB said 523 banks would borrow from the funds at a ultra low interest rate of about 1 percent. The supply of limit-free and cheap funds lifted markets sentiment as investors thought it would avoid liquidity crisis in the region and boost the economic recovery.
Meanwhile, concerns over supply disruption in Iran offered dynamics to the crude. It was reported that diplomats from the U.S. , the European Union, and other allies had agreed to put more pressure on Iran to force it to resume talks over its nuclear program.
Light, sweet crude for February delivery added 1.43 dollars, or 1.47 percent to settle at 98.67 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for February delivery also rose and last traded around 108 dollars a barrel.