Related News

Home » Business » Energy

Oil settles back, almost where it started

OIL prices took off yesterday after new government data showed bulging crude inventories grew less than what analysts expected, but settled only slightly above where they started the session.

Benchmark crude for May delivery rose as high as US$51.30 a barrel on the New York Mercantile Exchange, US$2.15 above Monday's settlement. But prices beat a retreat by afternoon, settling up 23 cents at US$49.38.

Some analysts suggested the initial rally came from traders covering bets that the price of oil would fall, rather than any excitement about government inventory data.

For the week ended Friday crude supplies increased by 1.7 million barrels, or 0.5 percent, to 361.1 million barrels, 15.2 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.

Analysts expected a boost of 2.3 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

"We're swimming in this stuff," oil analyst and trader Stephen Schork said after the report was released, noting that crude levels already were at 16-year highs before the release of the report.

Gasoline inventories rose by 600,000 barrels, or 0.3 percent, to 217.4 million barrels, 1.4 percent below year-ago levels. Analysts expected stockpiles of the motor fuel to fall by 1.5 million barrels.

Demand for gasoline over the four weeks ended Friday was 0.2 percent lower than a year earlier, averaging about 9.1 million barrels a day.

At the same time, U.S. refineries ran at 81.8 percent of total capacity on average, an increase of 0.1 percentage point from the prior week. Analysts expected capacity to increase 0.25 percentage point to 81.95 percent.

Inventories of distillate fuel, which include diesel and heating oil, fell by 3.4 million barrels to 140.8 million barrels for the week ended Friday. Analysts expected distillate stocks to slip 600,000 barrels.

Crude prices were lower before the government data came out. Addision Armstrong of Tradition Energy said he believes the rally was a result of traders covering positions in which they were betting that oil would fall.

"On a fundamental basis I don't see what the big deal is with these numbers," he said.

Oil prices and the stock market have rallied strongly in the last month on hopes that the U.S. economy is showing signs of a bottom and that the world's major powers would provide US$1.1 trillion in loans and guarantees to developing countries.

But after reaching US$52.64 Thursday, oil has fallen every day until yesterday. Jim Ritterbusch of Ritterbusch and Associates said oil prices have been following the stock market lower the past few days.

Oil also has been hurt by a strengthening dollar, he said. Because crude is bought and sold in dollars, a barrel of crude becomes cheaper if the dollar moves higher.

"It's a combination of a strong dollar and a weakening stock market. That's a pretty bearish combo for the energy complex," he said.

Other government data released yesterday showed wholesalers cut their inventories in February by the steepest amount in more than 17 years as companies struggled to reduce stockpiles amid slowing sales.

The Commerce Department said wholesale inventories dropped 1.5 percent, the most on records dating to January 1992 and more than double analysts' expectations.

The report shows companies are getting inventories under control, a positive sign because once stockpiles have been adjusted amid the recession, businesses may be able to increase orders for new goods.

In other Nymex trading, gasoline for May delivery fell 2.08 cents to US$1.4396 a gallon, and heating oil gained 0.7 cent at US$1.3982 a gallon. Natural gas for May delivery rose 6.8 cents to US$3.630 per 1,000 cubic feet.

In London, Brent prices added 37 cents at US$51.59 a barrel on the ICE Futures exchange.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend