Oil up on EIA demand report

20/08/2009

Crude oil prices surged on the New York Mercantile Exchange yesterday (August 19th) after the Energy Information Administration (EIA) published its weekly report into the state of the US fuel market.

Commodities, equities and currencies traders in New York reacted quickly to the announcement that there was an unexpected drop in crude inventories in the US last week, while heating oil and gasoline stocks were also down.

The 8.4 million-barrel decline was taken as a sign that demand for crude - and by extension the US economy - has turned a corner and the surge in oil prices was also matched on the stock market, while foreign exchange traders moved into riskier currencies.

Both the dollar and the yen - both considered safe haven currencies - rose earlier this week as the prospects for global economic recovery were weakened by a slump in Chinese stocks and shares.

However, with confidence newly resuscitated, traders began to move into riskier currencies such as the Australian and New Zealand dollars.