Oil climbs back above $70
Crude prices jump nearly $1 a barrel as EIA report reveals weaker-than-expected gasoline inventories, even though crude stocks hit their highest mark in 8 years.
NEW YORK (CNNMoney.com) - Oil prices climbed almost $1 dollar a barrel Wednesday even though the government said crude supplies rose more than expected. U.S. light crude for August delivery settled 99 cents higher at $70.33 a barrel on the New York Mercantile Exchange. Oil was nearly flat just prior to the report and has fluctuated roughly 25 cents in each direction following the report's release.
The Energy Information Administration, in its weekly stockpile report, said crude supplies rose by 1.4 million barrels. Analysts were looking for a drop of 200,000 barrels, according to Reuters. Distillates, used to make heating oil and diesel fuel, rose by 1.7 million barrels while gasoline supples increased by 300,000 barrels. Analysts were looking for a 1.2 million gain in distillate stocks and a 1.2 million barrel build in gasoline supplies. "The EIA's gasoline data showing a smaller-than-expected build looks supportive," Tom Bentz, an analyst at BNP Paribas commodity futures in New York told Reuters. "The crude numbers were higher than expected, but the market thinks gasoline is more important at this point." Crude supplies, now at an 8-year high, are well above their average level for this time of year. Distillate inventories are also above average, while gasoline supplies are about in line with where they usually are, the report said. The report also said refinery operations increased more than expected. Refineries operated at 93.3 percent capacity last week, up from 92.7 the week prior. Refinery bottlenecks have been one cause of high gasoline prices this year, as heavier-than-usual maintenance due to last year's storms took much refining capacity offline earlier this spring. Despite the rosier picture from U.S. supplies, Oil has stayed high even as other commodities have plunged under the combined pressure of potential U.S. interest rate rises and moves to curb rapid growth in China. The measures could dampen demand for raw materials, including oil, from the world's top two energy consumers. But with the Atlantic hurricane season barely underway, a quarter of Nigerian oil output closed by rebel attacks and continuing tension between the West and OPEC's second biggest producer Iran, few traders are brave enough to sell oil down. Iranian President Mahmoud Ahmadinejad said Wednesday Tehran would respond by Aug. 22 to international proposals seeking it end uranium enrichment. President Bush responded this seemed a long time for a reasonable answer. "Traders seem hesitant to push crude prices higher but there are few signs that a substantial downturn is imminent," Geoff Pyne at ABN AMRO, told Reuters. "The apparent invincibility of the global economy to high prices is being called into question. Against this though, there are still legitimate fears." The effect of high energy prices has done little to dampen rapid global expansion. Strong economic growth has hidden the impact of rising energy costs, analysts say. Higher fuel prices will cut back some consumption, but world oil demand should still soar 37 percent by 2030, driven by transportation and non-industrialized countries in Asia, the U.S. government's energy forecasting agency predicted Tuesday. Oil has slipped from its record $75.35 intraday high set in April, but still remains over three times more expensive since 2002. -- from staff and wire reports _____________
Related: Oil consumption seen soaring |
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