Oil Rises On Tight US Gasoline Stocks, Options Expiry
NEW YORK, Oct 16 (Reuters) - Oil prices rose in volatile trade on Thursday, as data showing tight U.S. gasoline supplies and technical trading ahead of options expiry provided rare support amid a long downturn.
U.S. government data showed gasoline stockpiles fell to their lowest level in two years, pushing gasoline futures 3 percent higher early and boosting crude futures which have fallen more than 25 percent since June.
At around 1 p.m. EDT (1700 GMT), crude suddenly surged as much as $3 a barrel as investors rushed to cover positions tied to U.S. WTI options trades set to expire later in the day, as well as automatic buy-stops. By the end of the session, oil prices had given up much of those gains, but remained higher on the day.
Brent crude for December delivery rose $1.70 to settle at $85.82 a barrel, after slipping to a four year low at $82.93. Brent crude for November, which expired Thursday, rose 69 cents to settle at $84.47 a barrel.
U.S. November crude rose 92 cents to settle at $82.70 a barrel, off the intra-day high of $84.83 a barrel.
Oil prices have slid precipitously since June as ample global supply outpaces weak demand. Saudi Arabia and other OPEC members have made it clear that they are not ready to cut production and shore up prices.
"The market is trying to find a bottom around $80, but there's a lot of support and short covering," said Andrew Lipow, president of Lipow Oil Associates.
New York gasoline futures rose more than 3 percent on Thursday after weekly data from the U.S. Energy Information Administration showed U.S. gasoline stocks fell 3.99 million barrels from the prior week to reach 205.6 million barrels, their lowest level since November 2012.
The dwindling gasoline stockpiles, a result of refinery maintenance and the switch from summer to winter blends, stabilized the declining market for crude oil. The EIA data also showed U.S. crude inventories rose 8.9 million barrels, far higher than analysts' expectations for a build of 2.8 million barrels.
While oil prices have been pressured by abundant supplies and the reluctance of OPEC countries to turn down the pumps, there are concerns on the demand side too. Investors are worried that airline business could suffer due to fear of the Ebola virus.
"There's a lot of oil sloshing around looking for a home," said Gene McGillian, an analyst at Tradition Energy.
(Reporting by Sam Adams; Additional reporting by Meeyoung Cho and Seng Li Peng; Editing by William Hardy, Jonathan Leff, Paul Simao and David Gregorio)
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