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5-Day Forecast
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Tuesday, January 6, 2009
24-Hour News Business |
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Oil above $106 after overnight jump
By GILLIAN WONG -- Associated Press Writer (Published March 26‚ 2008) SINGAPORE (AP) Oil prices rose to near $106 a barrel Thursday after soaring more than $4 in the previous session as lower U.S. fuel inventories and the further depreciation of the dollar spurred buying. U.S. stockpiles of gasoline and distillates, which include heating oil and diesel fuel, fell more than forecast last week, according to data released Wednesday by the U.S. Energy Department's Energy Information Administration. The inventory report in particular stoked worries that stockpiles of gasoline are falling right when analysts would like to see them rising - in advance of peak summer driving season. Gasoline inventories slid 3.3 million barrels last week, more than four times the decline analysts had expected. "The gasoline stock movement was probably quite supportive, it's the second week in a row now we've seen a larger than expected drop in U.S. gasoline stocks," said Mark Pervan, a commodity strategist at ANZ Bank in Melbourne, Australia. Light, sweet crude for May delivery added 6 cents to $105.96 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract rose $4.68 to settle at $105.90 a barrel Wednesday. The EIA reported that U.S. refinery activity also dropped, which analysts attributed to some refiners cutting gasoline production due to low profit margins. Gasoline inventories are 9 percent higher than a year ago. Valero Energy Corp. cut output at its Corpus Christi, Texas, refinery due to high supplies and falling demand, Dow Jones Newswires reported Wednesday. While gas prices are near records, they have not kept pace with crude's recent rally. Crude oil inventories, meanwhile, were unchanged. Analysts surveyed by Dow Jones Newswires had expected crude supplies to rise 1.7 million barrels. Pervan warned that the steadiness in crude oil inventories despite a decline in refinery utilization was an indication that U.S. crude demand was falling, which could lead to a drop in oil futures in the weeks ahead. "What the U.S. is doing is to try to match their crude oil stocks to the low refinery capacity by pulling back on their imports," Pervan said. "That should start to manifest itself in lower oil prices in the near term." Oil prices were also supported by U.S. economic news. The Commerce Department said new home sales fell last month to a 13-year low, and that orders for durable goods fell in February when analysts had expected an increase. Many investors view weak economic news as a sign that the U.S. Federal Reserve will cut interest rates more sharply than expected later this year. Lower interest rates tend to further weaken the dollar, which boosts oil prices. In other Nymex trading, heating oil futures rose 0.62 cent to $3.05 a gallon while gasoline prices rose 0.46 cent to $2.7475 a gallon. Natural gas futures dropped 4 cents to $9.532 per 1,000 cubic feet. In London, Brent crude gained 6 cents to $104.05 a barrel on the ICE Futures exchange. |
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