Crude oil futures prices trimmed some early gains, but remained higher Wednesday after an industry report showed U.S. crude oil inventories rose by more than expected in the latest week.
The Energy Information Administration said crude oil inventories rose by 4.233 million barrels in the week ended Aug. 12, that was more than the unexpected rise of 1.745 million barrels reported late Tuesday by the American Petroleum Institute, and contrasted with industry estimates for a drop of 600,000 barrels. Higher imports and a decline in crude processing at refineries led to the stock rise.
Prior to the EIA data, front-month crude oil futures prices on the New York Mercantile Exchange rose to a session high of $89 U.S. a barrel, up $2.35 U.S. a barrel, and the highest price since Aug. 4. Futures were spurred by strength in gasoline and heating oil prices, which responded to declines for those products in the API inventory report.
But the scope of the rise in crude stocks reported by the EIA sapped some strength.
Nymex September light, sweet crude oil was trading $1.77 a barrel higher, at $88.41 U.S. a barrel. ICE October Brent crude was $2.28 higher, at $111.41 U.S. a barrel.
Gasoline and heating oil held most of their gains, as EIA said gasoline inventories fell 3.51 million barrels in the week, to lowest level since May 20. The drop was less than the 5.374-million-barrel decline reported by API, but more the analysts' forecast of a 1.2-million-barrel decline.
EIA reported distillates stocks (diesel/heating oil) rose 2.449 million barrels in the week, counter to API's report of a decline of 1.293 million barrels. Analysts had forecast a 500,000 barrel rise in distillates. The rise put stocks at their highest level since March 4.
Traders noted that the gains could prove to be fleeting as demand for both gasoline and distillates declined in the week. But Carl Larry, director of energy derivatives and research at Blue Ocean Brokerage, said continued strong exports are likely to continue to pull down gasoline stocks, even if demand slows domestically, and that will continue to support prices.
Gasoline demand was 2.8% below a year ago and the lowest for this week in 10 years, at 9.195 million barrels a day, EIA data show.
September-delivery reformulated gasoline was 5.08 cents higher, at $2.9046 U.S. a gallon, but down from the high of $2.9268 U.S. a gallon. Heating oil was 4.67 cents higher, at $2.9793 a gallon, down from a high of $3.000 U.S. a gallon.
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