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article imageOil Price Jumps Surprise Drop in U.S. Crude Supply Blamed

By Bob Ewing     Aug 13, 2008 in Business
Oil prices have been falling but today the trend reversed itself with oil jumping more than four bucks a barrel. A greater fall in supply than anticipated is blamed.
Oil prices reversed themselves, after a steady decline by rising by over four dollars U.S. a barrel. The reason given is U.S. crude supplies shrank unexpectedly last week.
The cost of light, sweet crude for September delivery on the New York Mercantile Exchange moved as high as $117.43, up $4.42.
The month long slide is over, for now, but oil is still about $30 below its July 11 high of $147.27.
Crude stockpiles fell by 400,000 barrels to 296.5 million barrels for the week ending Aug. 8. Analysts had expected crude supplies to rise by 500,000 barrels.
Gasoline supplies fell by 6.4 million barrels to 202.8 million barrels last week, much more than the 2.2 million barrel drop analysts had predicted.
The news had a more pronounced effect on price than the factors that might have kept the price low or continuing on the downward trend.
Russia and Georgia declared a ceasefire that appeared to have reduced any concerns that hostilities there would have a major effect on oil shipments through Georgia.
The forecast by The International Energy Agency (IEA) for oil product demand from 30 developed countries, located mostly in Europe and North America, was lowered to 48.6 million barrels a day, down 1.3 per cent from last year.
It is too early to determine whether the recent fall in oil prices is a longer-term trend and it is possible demand in developing countries could offset declines in developed nations, and Chinese oil demand will continue to grow at a robust pace.
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