US Crude Ticks Lower, But Gasoline Rallies

U.S. oil futures finished nearly unchanged Thursday, pausing after a selloff this week, though gasoline futures rallied sharply on concerns of supply shortages.

Light, sweet crude for October delivery settled 11 cents, or 0.1%, lower at $91.87 a barrel on the New York Mercantile Exchange. That is the front-month contract's lowest finish since Aug. 3, following a plunge of about $7 over the previous three sessions.

With the October contract expiring at the close of trading, the more heavily traded November contract settled 12 cents, or 0.1%, higher at $92.42 a barrel. Brent crude on the ICE futures exchange settled $1.84, or 1.7%, higher at $110.03.

Gasoline futures rose nearly 3%, meanwhile, after a refinery fire was reported in Venezuela. Front-month October reformulated gasoline blendstock, or RBOB, settled 7.54 cents, or 2.7%, higher at $2.9040 a gallon.

"You've got these reports of shortages, and the products are certainly finding strength in that," said Stephen Schork, president of The Schork Group, a trading advisory firm.

Two naptha tanks caught fire at Venezuela's El Palito refinery overnight after a lightning storm. Although officials said the fire didn't affect operations at the facility--which processes about 135,000 barrels of crude a day--the event appeared to spook the market and send gasoline prices rallying. Several market participants reported shortages in the physical gasoline market, which is already tight in the U.S.

Still, many analysts believe the recent selloff in the oil market still has legs. Even though gasoline inventories are tighter, stockpiles of crude oil remain ample. The Energy Information Administration on Wednesday reported U.S. oil stockpiles surged 8.5 million barrels--compared with an expected increase of just 500,000 barrels. Imports surged 1.28 million barrels a day. Oil prices fell 3.5% on Wednesday alone.

Elsewhere, concerns about supplies have eased. This week, Saudi Arabia repeated its view that $100 a barrel represents a fair price for Brent crude and said it plans to keep production high to meet demand.

At the same time, demand remains tepid. In the U.S. initial jobless claims, a measure of layoffs, came in at 382,000 in the week ended Sept. 15, the Labor Department said Thursday, while claims for the previous week were revised higher. The figures indicate that the jobs market--a key driver of oil and gasoline demand--in the world's largest oil consumer is still sluggish.

"The growth factor, the demand, is simply not there," said Yu-Dee Chang, chief principal at ACE Investment in Washington, D.C.

China, the world's No. 2 oil consumer, reported weaker manufacturing data overnight. The country's preliminary September purchasing managers index came in at 47.8, indicating another month of shrinking activity. Europe also reported a similarly weak figure.

October heating oil settled 5.35 cents, or 1.8%, higher at $3.0975 a gallon.


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