Oil Futures Settle Higher As Gasoline Demand Picks Up

Crude-oil futures settled higher in a volatile session Thursday, lifted by an uptick in gasoline demand and a drop in U.S. inventories of the fuel ahead of the summer driving season.

Gasoline demand last week climbed to its highest level since August, the Energy Information Administration said in a weekly report. Traders largely shrugged off the agency's reading on oil inventories, which showed stockpiles shot to their highest level in 82 years.

"Guys were pretty encouraged by the gasoline number, and it is gasoline season," said Peter Donovan, vice president of Vantage Trading, an oil options brokerage in New York. "Forget about the crude, forget about the [heating oil] for a minute. Just look at the gas number."

Light, sweet crude for July delivery settled 48 cents, or 0.5%, higher at $93.61 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled down 24 cents, or 0.2%, to $102.19 a barrel.

The EIA reported gasoline stockpiles last week fell by 1.5 million barrels--well above the 200,000-barrel decline forecast by analysts in a Dow Jones Newswires survey.

Gasoline futures shot higher after the report, with the front-month June contract settling 0.94 cent, or 0.3%, higher at $2.8125 a gallon.

Oil stockpiles, meanwhile, rose by 3 million barrels to the highest level since May 1931, according to the EIA. Previously crude stockpiles had been hovering near their highest level since 1981. But the latest gain put stocks at their highest level for 82 years, according to the EIA.

Such a sizeable rise would normally be a weight on oil prices, but the figure failed to roil the market. Traders say they were more focused on the gasoline figure, while the year-on-year surplus of oil inventories has been shrinking recently.

Distillate stockpiles, including heating oil and diesel, rose 400,000 barrels last week, while refinery runs fell 0.9 percentage point to 86.4% of capacity.

Analysts had forecast a 400,000 barrel drop in oil inventories and a 200,000 barrel rise in distillate stocks. Refinery runs were seen rising 0.4 percentage point.

Oil futures have been caught in a tight range between $90 and $97 a barrel for most of May, as tepid economic growth in much of the world has kept prices in check while Middle East tensions keep a floor under prices.

On Friday, oil market watchers will shift their attention to Vienna, where a meeting of the Organization of the Petroleum Exporting Countries was underway. Ali al-Naimi, oil minister of Saudi Arabia, signaled approval of current oil prices, a sign that ministers won't change output policy at their Friday meeting in Vienna.

Dominick Chirichella, analyst at the Energy Management Institute in New York, said he wouldn't be surprised if the cartel winds up modestly cutting output. The group has been marred by a split between Saudi Arabia, the world's biggest exporter, and smaller members who want higher oil prices and are concerned about losing their clout because of surging North American oil production.

"The general consensus is that everyone's expecting a rollover agreement," he said. "They might make a token cut, just to let everyone know they're still there."

June heating oil settled 2.64 cents, or 0.9%, lower at $2.8431 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.


Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Technical Sales- Decontamination/Chemical Cleaning Services
Expertise: Sales
Location: Baton Rouge, LA
Account Manager - Western US - Vapor Control & Degassing
Expertise: Sales
Location: Long Beach, CA
Sales Manager - Vapor Control/Degassing Services
Expertise: Sales
Location: Houston, TX
search for more jobs

Brent Crude Oil : $51.78/BBL 0.77%
Light Crude Oil : $50.85/BBL 0.83%
Natural Gas : $2.99/MMBtu 4.77%
Updated in last 24 hours