BANGKOK (AP) — Oil dwelled near $89 a barrel Thursday in Asia after U.S. crude supplies dropped more than expected and markets waited to see if the European Central Bank would deliver on its promise of bold action to overcome the region's debt crisis.
Benchmark crude was down 12 cents at $88.81 a barrel at midafternoon Bangkok time in electronic trading on the New York Mercantile Exchange.
The contract rose 85 cents to settle at $88.91 in New York on Wednesday after the Energy Information Administration said U.S. oil stockpiles fell by a surprising 6.5 million barrels last week, four times what analysts forecast.
But the decline was mainly due to a drop in crude imports, not to a pick-up in demand for oil. Gasoline supplies also dropped unexpectedly last week, according to the EIA.
Brent crude was up 54 cents at $106.50 on the ICE futures exchange in London.
The key event for markets from stocks to currencies and commodities is the ECB's meeting Thursday. Expectations of strong action to stem Europe's debt crisis have been high after the central bank's president Mario Draghi last week said it would act decisively to keep the euro common currency intact.
The currency union has been increasingly strained by Europe's prolonged debt crisis, which has also dragged on global economic growth. A recent surge in Spain's borrowing costs raised the risk that one of Europe's biggest economies would need a huge bailout that could splinter the common currency.
Some analysts think the ECB may resume buying government bonds to reduce borrowing costs for struggling countries such as Spain and Italy or give a banking license to the European Stability Mechanism. The ESM is a fund set up to provide a financial lifeline to euro nations that face a crisis. Giving it a banking license would greatly increase its firepower.
Still, there are doubts the ECB will deliver on Draghi's bold words because of German resistance to the central bank taking on a role beyond its mandate of keeping inflation under control.
In other futures trading, heating oil was up 1 cent at $2.869 a gallon and wholesale gasoline was up 2.1 cents at $2.855 a gallon. Natural gas dropped 1.1 cent to $3.16 per 1,000 cubic feet.
