Crude-oil futures rose Wednesday after U.S. petroleum data showed drivers' strong demand for fuel cut into gasoline supplies, although crude stocks rose. Posted on 08/17/2005 10:40:30 AM PDT by M. Espinola
Crude-oil futures rose Wednesday after U.S. petroleum data showed drivers' strong demand for fuel cut into gasoline supplies, although crude stocks rose.
Crude oil inventories grew by 300,000 barrels last week to 321.1 million barrels, or 11 percent above year-ago levels, according to U.S. Department of Energy data released Wednesday.
But the nation's supply of gasoline fell by 5 million barrels, putting inventories at 198.1 million barrels, or 12 percent below last year.
Analysts had been expecting a rise in both crude and gasoline stocks.
The Department of Energy said that over the past four weeks, motor gasoline demand has averaged nearly 9.5 million barrels a day, 1.5 percent above year-ago levels.
Front-month September crude futures rose 22 cents to 66.30 in morning trading on the New York Mercantile Exchange. Crude futures hit a record peak of $67.10 a barrel in trading Friday.
Heating oil rose less than a cent to $1.8710 a gallon in morning trading, while gasoline rose more than a cent to $1.9950.
On London's International Petroleum Exchange, October Brent crude rose 13 cents to $65.21 a barrel.
Distillate fuel supply, which includes heating oil, rose by 1.2 million barrels to 131.1 million barrels, or 5 percent above year-ago levels, according to the weekly petroleum data.
U.S. refiners operated at 93.5 percent of capacity last week, a slight decline from 95 percent the week before.
Oil traders remained jittery Wednesday over the possibility of further refinery disruptions in the United States, Iran's nuclear showdown and news that protesters had shut down an oil pipeline in Ecuador.
"We just have to get used to the probability that oil is trading in a much higher range and for much longer than previously expected, and an upper price ceiling is almost impossible to determine at this moment," said Alex Scott, oil analyst at Seven Investment Management in London.
Analysts have blamed rising demand in the United States and China for supply tightness, as excess capacity shrinks to levels that could trouble markets in the event of a major outage.
A monthly report released Wednesday by the Organization of Petroleum Exporting Countries said the pace of oil demand is expected to rebound next year, supporting long-term bullish arguments.
"Average world oil demand for 2006 is projected to grow by 1.6 million barrels a day or 1.9 percent to average 85.2 million barrels a day," the report said. "This slightly higher forecast is due to the slightly more optimistic view of the world economy for the coming year."
Prices are now more than 40 percent higher than a year ago, when a furious rally began on troubles and outages in key producers Nigeria, Venezuela, Iraq and Saudi Arabia.
In recent weeks, oil prices have surged to new highs after a stream of U.S. refinery outages.
In Ecuador, protesters halted operations Sunday at a major oil pipeline in the Amazon basin, demanding the state-owned Petroecuador hire more locals and pay higher wages.
A Petroecuador official said more than 50,000 barrels a day has been lost so far - a relatively tiny figure compared to the global oil market, but still enough to unsettle an already-jittery market.
Also, protesting Nigerian villagers forced the closure of a Royal Dutch Shell PLC oil-pumping facility, cutting production by 10,000 barrels a day, company officials and village leaders said Wednesday.
The protesters were angered over Shell's compensation offer to villagers for environmental damage from a 2003 oil spill and fire.
Graphics added
Thank God we are camping only 30 miles from home this Labor Day!
The price 'rise' this joker is talking about lasted for about 10 whole minutes, and then....WHAMBO! There are some longs that really got smacked today. These mkts are in for a heavy correction at some point, for sure.
oil is down $2.00 today.
http://chart.bigcharts.com/custom/usatoday-com/marketwatch-ss-ii.img?symb=CRUDE
But I think that the original poster is right. We will see gas prices rise before Labor Day.
My daughters and I walked to Salvation Army today in hopes of getting school clothes. We will walk the little one to Kindergarten. If the prices stay high for the winter, it's a good excuse to homeschool her!
That said, I do think crude is going to find a long-term plateau above $50.00, possibly the $53-58 range. Depending on the refinery situation (how many are taken down for maintenance, either scheduled or not, in Sep-Oct), motor gasoline should find a level 40-odd cents lower, possibly a bit more. However, an outright crash just isn't in cards; too many geopolitical balls are in the air. Suggest using this upcoming correction, whether this week, next week, or whenever, to write way-out-of-the-money energy puts. Ought to be just money for jam.
You know, the Sierra Club, Green Peace, etc. are so damn smart. They have prevented a refinery from being built since 1976. Same with nuclear. MAN, these people are smart...
So damn smart, that if I hear one of them complain about the price of gas I'll deck 'em.
5.56mm
When you're up you're up, when you're down you're down.
When you're up against our team you're upside down!
Rah!
Actually, I think at some point there will be a crash. So much of the rise is speculative. Just like the "tech boom" and resultant bust. I'm thinking oil in the $30s within a year.
September is @$63.69 Down $2.39. Fund profit taking was inevitable.
>>There's always the subway, trolley or bus<<
No thanks!
Dad is pushing the Kindergarten thing. She is doing second grade work and is going for some time without her sister. About the time winter comes, I'll be dying to bring her back home!
In order for oil to drop 45%, back into the $30's the refinery situation would need to be seriously addressed, demand somehow reduced, plus the Iranian nuclear weapons problem, along with the rouge jihadist régime, would also have to be 'resolved' just to name a few energy trending related topics.
It's all very well to say, even truthfully, that coal oil is viable @ crude=$32.00, and tar sands are viable @ crude=$35-38.00, but as long as there's any measurable chance that the price of crude can pull another 1980s swan dive, investors are going to balk at putting up the capital for these substitutes.
Sure, they're doing the tar sands in Alberta right this minute...and that segment of the industry has been the poor stepchild for decades. It's VERY high-cap, high-intensity, and was almost wrecked for the second time in 25 years in the 1998 oil crash.
When those tree loving rodents fill up, just like everyone else, their not happy, even though they will not admit it.
The weekly supply figs weren't bullish at all, imnnho. The unleaded draw was right at average for this week, we've got #2 coming out of our ears (107% of the 5-year average), and the crude figs were ho-hum.
The longer term ingredients still remain on the bullish side. Contingent on various geostrategic factors in the Gulf area I would not rule out another major leap in prices before Christmas.
The most effective method in really hurting the hippie libs is drive up the prices of their illegal narcotics, since that's about the only thing they really care about.
Both the yield curve and the energy markets' pricing are skewed right now. They will deskew over time. Problem is, of course, in the practical sense, that citizens require these mkts, especially the energy mkts, to be accessible at a reasonable cost every day.
That ain't gonna happen for a while, sad to say. When a mkt and/or its related mkts are, effectively, running on 100-octane fear, it's apt to be quite some time before said mkt(s) begin behaving ''normally'' again. For mkts, fear is a poison, and it only leaves the system slowly.
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