Oil is treading water at a near-record $125 per barrel after a U.S. Energy Information Administration report indicated that weekly crude oil inventories rose a considerably smaller-than-expected 200,000 barrels. Economists surveyed by Bloomberg News had expected crude oil inventories to increase by 2.25 million barrels last week.
Gasoline supplies fell 1.7 million barrels.
The modest increase in oil inventories had little affect on oil prices, for the moment. Oil was down 87 cents to $124.93 per barrel in Wednesday morning trading. The other major energy commodities were also virtually unchanged. Unleaded gasoline fell 1 cent to $3.18 per gallon. Heating fell about 2 cents to $3.66 per gallon. Natural gas gained 10 cents to $11.52 per million BTUs.
Meanwhile, refineries operated at 86.6% of capacity for the week ended May 9, 2008, the EIA report indicated, up from 85.0% in the week ended May 2, 2008.
A bright spot: Refinery utilization
Independent energy trader Jim Dietz told BloggingStocks Wednesday the increase in refinery utilization was the report's lone bright spot.
"The refinery utilization increase suggests an end to the maintenance season, which is good news for gasoline supplies," Dietz said. "Gasoline prices are high because of oil's high price, but they would be even higher if consumers weren't cutting back because gasoline supplies have been below average for the season. Hopefully, refineries will be able to increase gasoline supplies for the critical summer months." Dietz added that he is long with oil and gasoline, with both daily and monthly trades.
Amid a record, average U.S. gasoline price of $3.73 per gallon, U.S. gasoline consumption has declined, on a year-over-year basis, for about three months.
Dietz added that he expects oil to test $130 per barrel this month, with the average U.S. gasoline price rising to $3.80-$3.85 by June 1.
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