Crude oil surged past $135 Wednesday after a weekly U.S. Energy Information Administration report indicated weekly oil inventories plunged 4.6 million barrels.
Economists surveyed by Bloomberg News had expected weekly oil inventories to decline by 1.5 million barrels. It was the fourth straight weekly decline for oil inventories.
The oil market, at least initially, interpreted this week's report as another bullish data point for oil, and looked past weekly increases in both gasoline and distillate supplies, which rose 1 million and 2.3 million barrels, respectively. Oil futures, up about $3.50 before the report rallied further -- rising $4.63 to $135.96 on the news in Wednesday morning trading.
The other major energy commodities also rallied after the weekly inventory report. Heating oil jumped about eight cents to $3.89 per gallon, unleaded gasoline added about eight cents to $3.40 per gallon, and natural gas climbed 21 cents to $12.69 per million BTUs.
U.S. crude oil inventories now stand at 302.2 million barrels and are at the lower boundary of the average range for this time of year, the EIA said. Oil imports averaged about 9.7 million barrels per day last week, down about 98,000 barrels per day from the previous week.
Also, refineries operated at 88.6% of their operable capacity last week, a decrease from the 89.7% statistic registered for the week ending May 30, 2008.
Oil Analysis: If past is prologue, oil's recent pull-back should be over, unless the market looks beyond the fourth consecutive decline in weekly oil inventories and emphasizes the weekly gain in gasoline supplies. But the latter is not likely, given the focus on oil inventory supplies in conjunction with rising international (emerging market) oil demand. Traders are likely to interpret this week's report as another sign of continued tight oil supplies, globally -- making, as one trader put it, the shorting of oil a tactic for the courageous only.
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Reader Comments (Page 1 of 1)
6-11-2008 @ 12:05PM
Eric said...
"Oil imports averaged about 9.7 million barrels per day last week, down about 98,000 barrels per day from the previous week."
Is it possible that imports are down because demand is down? This is why inventories dropped, not because of any reason that would be bullish for oil.
http://marketprognosticator.blogspot.com/