Oil futures jumped more than a dollar in midmorning trading after a U.S. oil inventory report appeared bullish, before falling back somewhat.
U.S. weekly oil inventory data was expected to show crude inventories increased last week, but data released by the Department of Energy's Energy Information Administration showed a draw-down of 4.7 million barrels. Such a large draw would normally indicate strong demand, though the agency's figures showed the amount of total products supplied, a measure of demand, actually declined from the previous week.
Indeed, analysts expect trading to be driven largely by a focus on macro-economic issues such as currencies, equity markets and the European debt situation. Newly issued U.S. economic reports said housing starts jumped and consumer prices were in line with expectations.
Light, sweet crude for November delivery was up 46 cents U.S., or 0.5%, at $88.80 U.S. a barrel on the New York Mercantile Exchange. November futures go off the board Thursday. The December contract was up 46 cents, or 0.5%, at $88.99 U.S.
Brent crude on the ICE Futures Europe exchange was down 21 cents, or 0.2%, at $110.94 U.S. a barrel.
In a research note Monday morning, Goldman Sachs said the recent oil price surge is driven by hopes that German and French leaders will finally come up with a comprehensive solution to the European debt crisis. A summit is scheduled for this weekend.
Since hitting recent lows Oct. 4, Nymex crude oil futures prices have rallied nearly $14 U.S. a barrel and Brent prices have rallied about $12 U.S. "The rally was part of a broader market rally in risky assets and the euro," the bank said.
Front-month November reformulated gasoline blendstock, or RBOB, was down 1.11 cents U.S., or 0.4%, at $2.7359 U.S. a gallon. November heating oil rose 1.19 cents, or 0.4%, to $3.0396 U.S. a gallon.
