Oil Rises on Inventories Drop, ECB

NEW YORK, Sept. 7 -- Crude prices rose on Thursday after U.S. crude inventories dropped steeply last week and the European Central Bank announced a bond-buying plan.

The ECB decided at a meeting on Thursday to launch an unlimited and sterilized bond-buying plan to purchase government bonds in secondary markets in order to tackle the region's debt crisis and boost the economy. The ECB's new measures lifted market sentiment and bolstered oil prices.

"I think, market participants will emphasize the open-ended nature of it," Vincent Reinhart, chief U.S. economist of Morgan Stanley, commented on the ECB's plan. Confidence in that the situation of eurozone will be improved pushed up the crude prices.

But some analysts also noticed that there were strict conditions attached to the new program and it lacked details of the conditions, which could lead the program to another disappointment.

Oil prices got further supports after the Energy Information Administration said U.S. crude inventories declined steeply by 7.4 million barrels in the week ended August 31, the biggest drop in this year. Both the imports and the domestic production dropped in the week. Analysts had expected a drop of 5.6 million barrels.

On the economic front, U.S. initial jobless claims decreased 12, 000 in the September 1 week, to 365,000 for the lowest level in four weeks. This was at the best end of expectations and added to lifting factors for oil prices.

Light, sweet crude for October delivery added 17 cents, or 0.18 percent to settle at 95.53 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for October delivery gained 40 cents, or 0.35 percent, to close at 113.49 dollars a barrel.