|
NEW YORK (CNN/Money) -
After a volatile morning, oil prices firmed above $50 a barrel Wednesday as traders disregarded a government report that showed U.S. stockpiles reached their highest level in six years.
U.S. light crude for June delivery climbed 63 cents at $50.13 a barrel on the New York Mercantile Exchange, following Tuesday's close at $49.50 per barrel.
Just before the Energy Information Administration release, the contract was up about 45 cents, hovering just below $50. It then fell as low as $48.80, before rebounding above the $50 mark.
In London, the June Brent contract rose 45 cents before settling at $50.97.
"The bulls are trying to put up a fight here, trying to make a case that the build in stocks and the drop in price over the past month haven't really hurt all that bad," Tim Evans of IFR Energy Services told Reuters.
The Energy Information Administration said Wednesday that crude oil inventories rose by 2.6 million barrels in the week ended April 29, far greater than the 1 million barrel rise forecast by Reuters. The government agency noted that this is the highest inventory level since July 1999.
At 327 million barrels, crude oil inventories are above the upper end of the average range for this time of year, and the highest since the end of March 2002, the EIA said.
"A lot of people just don't believe the buildup," said Phil Flynn, an energy analyst at Alaron trading. "The market's not buying rumors of slowing demand."
Flynn added that the market had also been expecting a bearish report, despite forecasts, and that the EIA figures were not worse than many on the floor had anticipated.
The June light crude contract lost nearly $1 immediately following the release, but the contract soon rallied as floor talk grew that most of crude build was on the West Coast, not in regions that affect crude futures.
"This is in-transit oil that didn't hit the market last week," said Rick Thompson, an independent oil trader.
"That amount will be extracted out of the report and discarded, especially since a lot of people are expecting a corresponding negative adjustment next week," he added.
Moreover, closely watched gasoline inventories also jumped, climbing by 2.2 million barrels, versus a forecast from Reuters that anticipated a 700,000 barrel rise, allaying some concerns that stockpiles wouldn't be able to match summer driving demand.
Despite the increase in refinery inputs, gasoline production declined slightly last week, averaging nearly 8.8 million barrels per day, the report said.
But total gasoline imports, including both finished gasoline and gasoline blending components, averaged over 1 million barrels per day for the fourth consecutive week -- the first time this has ever happened, the agency said.
Distillate fuel stocks used for heating fell by 300,000 barrels, the EIA said, versus Reuters' forecast for a 700,000 barrel rise in distillate inventories.
Click here for CNN/Money's special report -- "Oil Crunch 2005."
|
