Oil prices rise on surprise supply drop

The price of oil climbed to near $89 per barrel yesterday after the government said supplies have dropped more than analysts expected. Prices rose after the US Energy Information Administration said US oil stockpiles fell by a surprising 6.5 million barrels last week — four times what analysts expected. Gasoline supplies also dropped unexpectedly last week, according to the EIA. The economic news was mixed yesterday. The US Commerce Department said construction spending rose in June. But US manufacturing activity fell in July and surveys showed that manufacturing activity barely grew in China. The US Federal Reserve said the US economic recovery had lost momentum so far this year, but stopped short of offering new monetary stimulus even as it signaled further bond buys could be in store. Brent and US crude futures initially pared gains in choppy trading after the Federal Reserve’s statement. Brent September crude was up $1.26 at $106.18 a barrel at 1825 GMT, having traded from $104.06 to $106.92. US September crude rose 85 cents, or 0.97 percent, to settle at $88.91 a barrel, having traded from $87.51 to $89.47. From : Arabnews