Oil price fluctuations

Crude-oil futures rose after the Energy Department reported that U.S. oil supplies declined more than expected last week. Oil stockpiles fell 4.2 million barrels to 287.1 million, the lowest since the week ended March 12. Supplies were expected to drop 400,000 barrels, according to the median of forecasts by 13 analysts in a Bloomberg survey. Prices have plunged from a record $49.40 a barrel on Aug. 20 on reduced concern that supplies from Iraq would be disrupted. ``Refiners are chewing through a great deal of crude oil,'' said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. in New York. ``In a matter of weeks we've gone from being well supplied to having tight inventories.'' Oil plunged after Shiite militants loyal to Moqtada al-Sadr and government forces agreed to a cease-fire on Aug. 26 in Iraq, easing concern about attacks on pipelines. Iraq's oil exports fell for a fourth month in August to 1.34 million barrels a day, down from this year's peak of 1.8 million in April, according to data collected by shipping agents, informs Bloomberg. According to Star Tribune, oil futures dropped by nearly $1 per barrel Monday despite pipeline sabotage in Iraq that has delayed exports from a southern port -- reinforcing the view among traders that prices had risen too fast earlier this summer. "It just goes to show you that when the psychology turns, it turns," said Tom Bentz, a trader at BNP Paribas Futures in New York. There were also signs Monday that a peace deal reached in Najaf, Iraq, last week could spread to other parts of the country, raising hopes that saboteurs might stop attacking oil pipelines. An aide to Muqtada al-Sadr said the rebel Shiite cleric called for his followers across Iraq to end fighting against U.S. and Iraqi forces and that he is planning to join the political process in the coming days. Light sweet crude for October delivery plunged 90 cents to $42.28 on the New York Mercantile Exchange. Crude futures are at their lowest level since July 27 and roughly 14 percent below the record settlement high of $48.70 on Aug. 19. When adjusted for inflation, oil prices are about half the price reached in 1981 after the Iranian revolution. Oil markets have been extremely volatile this summer because traders fret there is inadequate supply globally in the event of a prolonged output disruption in Iraq, Russia or Venezuela. But with the exception of sporadic dropoffs in Iraqi oil exports because of attacks on industry infrastructure, none of these fears have materialized. Oil-price speculation by institutional investors magnified this summer's surge in prices, as well as the latest retreat, traders said. Crude oil futures jumped more than $1 to top $43 a barrel Wednesday after data showed a steep decline in inventories. The Energy Information Administration, the statistics arm of the Department of Energy, reported that U.S. commercial inventories of crude oil shrank by 4.2 million barrels to 287.1 million barrels last week, as imports fell and refiners continued to operate at unusually high rates. The American Petroleum Institute, a trade group, reported an even larger inventory decline of 8.093 million barrels. Analysts and traders expressed shock at the data. Most analysts had predicted inventories to remain steady or increase slightly. A minority had forecast lower stocks, though nowhere near as large as what the data showed, publishes Seattle Post.

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