Oil futures rise to $100.09 a barrel
CITY AND DATE One day after oil prices briefly touched $100 for the first
time, the Energy Department's Energy Information Administration
said crude inventories fell by 4 million barrels last week, much
more than the 1.7 million barrel decline analysts surveyed by Dow
Jones Newswires, on average, had expected.
On the other hand, inventories of distillates, which include
heating oil and diesel fuel, rose by 600,000 barrels, countering
analyst expectations that distillate supplies would fall by 600,000
barrels. And supplies of gasoline rose by 1.9 million barrels, more
than the 1.3 million-barrel increase analysts had expected.
The report ultimately pulled prices lower by showing that
critical heating oil supplies and refinery capacity are growing
more than expected.
Light, sweet crude for February delivery fell 44 cents to settle
at $99.18 a barrel on the New York Mercantile Exchange after
earlier rising to $100.09, a trading record.
"Any surprises (in the report) are more the result of false
expectations as opposed to anything truly remarkable in the data,"
said Tim Evans, an analyst at Citigroup Inc. in New York, who added
that crude inventories often fall this time of year, while
distillate and gasoline supplies typically increase.
February gasoline fell 2.75 cents to settle at $2.5414 a gallon
on the Nymex, and February heating oil fell 2.13 cents to settle at
$2.7191 a gallon. Both contracts set new trading records Thursday.
February natural gas fell 17.6 cents to settle at $7.674 per
1,000 cubic feet.
At the pump, meanwhile, gas prices rose 0.3 cent overnight to a
national average of $3.052 a gallon, according to AAA and the Oil
Price Information Service. Retail gas prices have rebounded in
recent weeks, following oil's lead.
Crude's move to $100 a barrel prompted Indonesian officials to
announce plans to ask OPEC to boost output to bring down oil
prices, Dow Jones reported. While that may be tempting to some
Organization of Petroleum Exporting Countries members, many
analysts think high prices will themselves do the trick by cutting
demand.
"It is unlikely the cartel will decide to increase output
quotas ahead of the normally low-demand second quarter," said
Addison Armstrong, director of exchange traded markets at TFS
Energy Futures LLC in Stamford, Conn., in a research note.
"Furthermore, the U.S. economy is slowing, the result of which is
likely to be lower demand for oil."
Indeed, there are already signs demand is slowing. Gasoline
demand fell last week by 160,000 barrels, and rose only 0.1 percent
over the last four weeks compared to the same period last year.
Analysts consider year-over-year demand growth of under 1.5 percent
to be tepid.
Also in its weekly report, the EIA said crude supplies at the
closely-watched Nymex delivery terminal in Cushing, Okla., were
unchanged last week at 17.5 million barrels. Falling supplies there
are seen as a symptom of a tight market, and those concerns ease
when Cushing inventories rise.
Refinery activity rose by 1.3 percent last week to 89.4 percent
of capacity. Analysts had expected refinery use to increase by 0.4
percentage point.
Crude imports rose last week by an average of 204,000 barrels a
day to 10 million barrels a day. Gasoline imports rose 136,000
barrels a day to an average of 1.2 million barrels a day.
Prices have been volatile in recent days due to low holiday week
trading volumes. That means some of the price moves, including
Thursday's record, may be exaggerated.
"We're still in a little bit of a holiday trading lull," said
Evans, who noted that volumes on Wednesday - when oil first reached
$100 - were about 72 percent of normal.