Gasoline, oil prices jump after steep decline in US inventory
NEW YORK -- Gasoline and oil prices rose yesterday after the US government reported a steeper-than-expected decline in gasoline inventories.
Total US gasoline stockpiles sank 5.5 million barrels last week to 199.7 million barrels, according to the Energy Information Administration. Analysts had been expecting just a 1.3 million barrel decline, according to a Dow Jones Newswire survey.
Light, sweet crude for May delivery rose 12 cents to settle at $62.01 on the Nymex, after earlier climbing as high as $62.56 and dropping as low as $61.53. On London's ICE Futures exchange, May Brent crude added 42 cents to reach $67.84 a barrel.
The spread between Brent and Nymex prices worries Alaron Trading Corp.'s Phil Flynn. If such a wide disparity continues, it could mean lower imports coming to the United States as crude heads to Europe instead, he said.
That would put further pressure on inventories.
Energy Information said gasoline demand has been strong recently, averaging nearly 9.4 million barrels per day over the past four weeks, or 2.5 percent higher than the year-ago period.
Several gasoline-making units were offline for routine seasonal work, putting a crimp in production, said Citigroup Global Markets energy analyst Tim Evans. Production dropped 242,000 barrels per day from the prior week to 8.5 million barrels daily.
Looking ahead, drivers can take some reassurance that better operating rates at refineries and expected increases in production should help gasoline supplies.
"That's why we're not seeing the kind of 10-cent rally that we did when (gasoline) stocks fell 5 million barrels in the prior week," Evans said. "It's like traders said, 'Well, yeah, inventories fell, production was down, but we have some confidence that refiners will be able to get those gasoline units back online.' "
Gasoline futures added 3.57 cents per gallon to settle at $2.1587 on the New York Mercantile Exchange. Earlier in the session, they climbed to $2.17, their highest point since Aug. 10.
At the pump, a gallon of unleaded costs an average of $2.795 nationwide, according to the American Automobile Association and Oil Price Information Service. That's up from $2.54 a month ago and $2.686 a year ago.
The Energy Department said Tuesday that the recent sharp rise in gasoline is likely to slow in coming weeks with prices averaging $2.81 a gallon over the vacation driving season.
Crude oil inventories, meanwhile, rose by 700,000 barrels last week to 333.4 million barrels, compared with analysts' expectations of a 1.6 million barrel gain. Stocks of distillate fuels, which include heating oil, added 100,000 barrels to 118.1 million barrels, compared with analysts' expectations of a 900,000-barrel decline.
In other Nymex trading, natural gas futures fell 1.4 cents to $7.855 per 1,000 cubic feet. Heating oil futures rose 1.86 cents to $1.8747 a gallon.