Oil, Equities Soar After Unexpected Drop in Petroleum Reserves

An unexpected drop in U.S. petroleum reserves reported mid-morning Wednesday surprised the financial markets, which had been expected a moderate drop. U.S. commercial crude oil inventories for the week ending Oct. 14 decreased by 4.7 million barrels, according to weekly U.S. Department of Energy report. Analysts had predicted a rise of 1.75 million barrels

Oil futures immediately jumped. Light sweet crowd for November delivery, which had been see-sawing between $88 and $88.50 on the New York Mercantile Exchange prior to the report's release, quickly blew through the $89 mark. The U.S. equities market was also livened by the news. After dipping slightly in early trading, all indices were trending up after 10:30. The benchmark Dow Jones Industrial Average was recently trading at 11,614.82, up 37.77 or 0.33 percent from the previous day's close. The broader S&P 500 Index was at 1,226.14 , nearly flat from the previous day's close, but higher than earlier in the session. The tech-heavy NASDAQ Composite, weighed down by a spate of disappointing earnings from technology companies was down slightly, trading at 2,645.59, 11.84 or 0.45 percent less than the previous day's close. Still, those number were higher than early session figures.

A decrease in petroleum inventories, which indicates an increase in demand, can be an encouraging sign that the market expects higher consumption in the short-term.