Crude Rises to Highest Level Since May
Oil futures prices rose to their highest level in three months Wednesday following a report of a steep drop in U.S. oil stockpiles and fresh tensions in the Middle East.
Light, sweet crude for September delivery settled 90 cents, or 1%, higher at $94.33 a barrel on the New York Mercantile Exchange, the highest finish since May 14. Brent crude on the ICE futures exchange recently rose $2.20, or 1.9%, to $116.23 a barrel.
Crude futures jumped from earlier losses after the Energy Information Administration said U.S. oil stockpiles fell 3.7 million barrels last week. The drop was well above the 1.9 million-barrel-draw forecast by analysts surveyed by Dow Jones Newswires, and came as U.S. demand for gasoline rose to a 13-month high.
The demand jump comes as a surprise, said Phil Flynn, analyst at Price Futures Group in Chicago, because gasoline prices have been climbing in recent weeks due to a series of refinery outages.
"Maybe the economy is getting a little bit better and people are feeling more confident," Mr. Flynn said.
Gasoline inventories fell 2.4 million barrels, while distillate stocks rose 700,000 barrels, according to the EIA. Refinery utilization remained unchanged at 92.6% of capacity.
Analysts expected gasoline stockpiles would fall a smaller 1.7 million barrels last week, while distillate stocks were seen falling 400,000 barrels. Refinery utilization was expected to drop 0.6 percentage point to 92% of capacity.
U.S. implied gasoline demand rose 5.3% last week to its highest level in 13 months. The U.S. is the world's biggest consumer of crude oil and traders closely follow the EIA's weekly report for cues on supply and demand.
The price of regular gasoline averaged $3.709 a gallon Wednesday, according to auto club AAA, up from $3.396 a month ago.
Nymex crude spent the morning in negative territory after the American Petroleum Institute, an industry group, said its own report showed U.S. oil stockpiles last week unexpectedly rose 2.8 million barrels.
Oil prices also got a boost Wednesday after The Associated Press reported that Saudi Arabia had ordered its citizens to leave Lebanon over kidnapping fears. Saudi Arabia is the world's biggest oil exporter, and tensions there and across the Middle East have kept oil prices trading a premium for more than a year, amid fears of supply disruptions.
"You can see the tensions continue to rise in the Middle East, and it's not going to be good," said Carl Larry, president of the trading advisory firm Oil Outlooks and Opinions. "People are just worried."
Front-month September reformulated gasoline blendstock, or RBOB, settled 8.26 cents, or 2.8%, higher at $3.0840 a gallon. September heating oil settled 5.06 cents, or 1.7%, to $3.0852 a gallon.
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