Research Request #4 - Oil Prices Jump on Inventories, Fed

AP
Oil Prices Jump on Inventories, Fed
Wednesday December 12, 3:37 pm ET

By John Wilen, AP Business Writer

Crude Futures Spike After Energy Department Reports Supplies Fell, Fed Announces Credit Plan

NEW YORK (AP) -- Energy futures rose sharply Wednesday after the government reported unexpected declines in supplies of crude and heating oil last week and the Federal Reserve announced a plan to help banks weather the credit crisis.

Crude supplies fell 700,000 barrels during the week ended Dec. 7, according to a weekly inventory report from the Energy Department's Energy Information Administration. Analysts had expected a 100,000 barrel increase.

And supplies of distillates, which include heating oil and diesel fuel, fell 800,000 barrels; analysts had expected inventories to rise by 300,000 barrels.

"Traders are concerned about that drop in distillate supplies," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.

Earlier, the Fed said it was working with other central banks to try to counter the credit crisis. That alleviated some of investors' disappointment that the Fed on Tuesday cut interest rates by just a quarter percentage point. Many investors had hoped for a larger half-point cut.

"Anything the Fed is doing to help out is going to support oil prices," said Brad Samples, commodities analyst at Summit Energy Services Inc. in Louisville, Ky.

Light, sweet crude for January delivery rose $4.37 to settle at $94.39 a barrel on the New York Mercantile Exchange, and January heating oil futures jumped 12.02 cents to settle at $2.6432 a gallon.

It was crude's highest close since Nov. 27....

(http://biz.yahoo.com/ap)