Crude-oil futures settled slightly higher Wednesday, as investors awaited guidance from Thursday's U.S. oil inventory data and signals from the European Central Bank's policy meeting.
Prices swung in an erratic $1.40-a-barrel high-low range before ending the session little changed. Prices rose to highs after revised data showed U.S. second-quarter productivity was stronger than early indications and economists' forecasts. The Labor Department said nonfarm-business productivity in the second quarter rose at a 2.2% annual rate, compared with an initial reading last month of 1.6%. Economists surveyed by Dow Jones Newswires expected a 1.9% rise.
But the gains didn't stick as analysts said the nervous market, with a wary eye on the ECB talks and U.S. jobs data due Friday, essentially marked time ahead of the widely anticipated events.
"It's really a toss-up what may come out of the ECB," said Gene McGillian, broker and analyst at Tradition Energy. "There's a lot of uncertainty, the market's just trying to get by the ECB and the Friday number," he said. "The market's looking for a catalyst for further gains and it just doesn't have it."
October-delivery crude-oil futures prices settled six cents higher, at $95.36 a barrel. ICE North Sea Brent for October settled $1.09 lower, at $113.09 a barrel.
In the wake of Hurricane Isaac's swing through the Gulf Coast over the weekend, analysts expect oil-inventory data from the Energy Information Administration to show big drawdowns in inventories occurred last week, along with a sharp slowdown in refinery operations.
The EIA report, delayed one day until 11 a.m. EDT Thursday due to the Labor Day holiday last Monday, is expected to show crude-oil stocks dropped 5.6 million barrels in the week, as Gulf oil output was slashed on precautionary shutdowns ahead of the storm. Analysts surveyed by Dow Jones Newswires expect the figures to show refineries cut operations relative to capacity by 3.1 percentage points as Isaac triggered disruptions such as flooding and power cuts at some plants, along with short-lived precautionary shutdowns elsewhere.
Distillate stocks [diesel and heating oil] are expected to show a drop of 1.9 million barrels last week, while gasoline stocks are expected to be down 3.6 million barrels. A cut of that size would put gasoline inventories at their lowest level since October 2008.
At the peak of storm-related shutdowns, more than 900,000 barrels a day of Gulf Coast refining capacity was offline last week. To prevent shortages of gasoline from the shutdowns, the Environmental Protection Administration said Wednesday it was permitting the early use of winter-specification gasoline in eight states supplied by Gulf refineries. The winter specification normally comes into effect Sept. 15 and EPA said it was acting in response to potential "inadequate supplies" of summer-grade fuel late in the season. Gasoline specifications change on a seasonal basis in effect to minimize creation of smog.
Jim Ritterbusch, president of Ritterbusch & Associates, said the market is hoping the ECB policy meeting sheds light on potential euro-zone bond-purchase programs, adding favorable news for the euro may already be discounted.
"Without further assistance from a strengthening in the euro, we feel that the oil complex will have difficulty maintaining the summer price advance, even if the U.S. equity markets show some revived strength," Mr. Ritterbusch said.
Reformulated gasoline blendstock futures for October delivery settled 0.24 cent lower, at $2.9498 a gallon, a one-month low, reflecting the end of the peak summer-driving season.
October heating-oil futures settled 2.92 cents lower, at $3.1176 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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