Commodity Corner: Oil Falters on EIA Report
Crude oil for May delivery edged downward Wednesday after the U.S. Department of Energy reported that oil inventories at Cushing, Okla., hit an all-time high last week.
May crude ended the day at $104.27 a barrel, a 52-cent decline from Tuesday, after the DOE's Energy Information Administration announced that inventories at the NYMEX delivery point rose by 1.7 million barrels to reach 41.9 million barrels for the week ending March 25. According to EIA, total U.S. commercial crude inventories hit 355.7 million barrels last week—the fifth consecutive week-on-week increase.
Last week's 2.9 million-barrel build exceeded analysts' expectations. For instance, Platts reported that analysts queried for its survey expected a relatively modest 2.2 million-barrel gain for the week.
Oil traded within a range from $103.44 to $105.15 Wednesday.
Although temperatures in the northeastern U.S. have become milder in recent days, the region is bracing for yet another bout with winter weather and will likely need to crank up their furnaces. A"Nor'easter" is expected to dump several inches of snow throughout much of the region by Friday. The prospect of more wintry weather in a region that has already endured a particularly cold winter drove natural gas futures to $4.355 per thousand cubic feet during the midweek session—a 9.5-cent gain from Tuesday.
Also propelling natural gas Wednesday was an energy policy announcement by President Obama in which he called for a one-third decrease in the country's dependence on imported oil over the next decade. Along with other measures, Obama advocates the creation of tax incentives for businesses to buy natural gas-powered trucks and fleet vehicles.
May natural gas peaked at $4.375 and bottomed out at $4.255.
April gasoline gained a penny to settle at $3.06 a gallon after fluctuating from $3.04 to $3.07.