|
NEW YORK (CNN/Money) -
Oil prices slid almost a dollar Wednesday in the wake of a fuel inventory report that showed a smaller-than-expected drop in crude inventories, a sharp rise in gasoline stocks and a weaker-than-expected reading on distillate fuels.
U.S. August light sweet crude fell 95 cents to settle at $58.09 a barrel on the New York Stock Exchange.
Calling the report "sharply neutral," analysts believed that prices would fluctuate throughout the day, with hints of continued strong demand in the report from the Energy Information Administration offsetting a bullish gain in supply.
Crude inventories dropped by 1.6 million barrels for the week ended June 17, the EIA said, while analysts polled by Briefing.com expected crude stocks to slip by 2 million barrels.
At 327.4 million barrels, crude inventories remain well above the upper end of the average range for this time of year, the report said.
Prices have hit new highs in each of the last three trading sessions on supply disruption fears coupled with concerns about a winter fuel crunch, prompting speculators to bet on a push above $60 a barrel.
But those fears eased a bit after the EIA said that distillate inventories, which include heating oil, rose by 1.3 million barrels last week, versus a forecasted 2 million barrel gain.
While the gain was less than expected, analysts said it was broadly in line with expectations, and that the number was positive given that refinery inputs for distillates fell last week.
"Initially, traders saw the (EIA) numbers and thought the selloff was overdone and immediately covered short positions. But they were really impressed by the fact that refineries were able to grow back distillate inventories and keep up with gasoline," said Phil Flynn, an oil analyst at Alaron trading.
"If the market senses that refiners can handle both, then prices will stay lower," said Flynn, adding that stocks were still well below their five-year average.
Distillate fuel inventories remain in the lower half of the average range for this time of year; and distillate fuel demand has averaged 4.1 million barrels per day, or 6.9 percent above the same period last year.
Meanwhile, gasoline inventories rose by 200,000 barrels, the EIA said, versus Briefing's forecast for a 50,000 barrel rise, with the U.S. summer driving season in full swing.
The EIA said gasoline inventories are in the upper half of the average range. And demand for gasoline over the last four weeks is up 2.5 percent over the same period last year. This puts gasoline demand at an average 9.4 million barrels per day.
The Organization of the Petroleum Exporting Countries (OPEC) has been pumping near a 25-year high over the past two months in an attempt to cool prices, but traders have been unimpressed by the move.
But Saudi officials told Secretary of State Condoleezza Rice Tuesday that the kingdom could not solve the refinery bottlenecks that it believes have helped to push oil prices towards $60 a barrel.
U.S. crude refinery inputs fell last week, down 386,000 bpd to average 16 million bpd, while refineries operated at 94.8 percent of their operable capacity.
With lower refinery inputs, both gasoline and distillate production reported declines last week, averaging 8.7 million barrels per day and 4.2 million barrels per day, respectively.
Read our special report -- "Oil Crunch 2005."
|
