Oil rises above $70 on inventory data

20 May 2010

Written by Kim Bardsley

Crude oil prices were climbing on the New York Mercantile Exchange this morning (May 20th) and were trading above $70 a barrel by the time European markets opened.

The commodity climbed after a report from the Energy Information Administration released yesterday showed stronger-than-expected inventory figures for last week, indicating a partial recovery in demand.

While crude oil stocks rose, the margin was far less than anticipated, and distillates registered an unexpected decline.

The data gave a lift to both crude and heating oil prices this morning, although traders were still cautious due to concerns about European economic stability.

Speaking to Reuters, Ben Westmore, an analyst at National Australia Bank, commented: "I think the most relevant factor in the market at the moment is still the situation in the euro zone. Overnight it seems to be more uncertain as Germany banned naked short selling."

The ban on naked short selling was announced yesterday in a bid to curb speculation in the euro, euro-denominated bonds and major blue-chip stocks.