West Texas Intermediate oil advanced after US crude
stockpiles tumbled as refineries increased processing rates
to the highest level in almost nine years.
Crude supplies dropped 7.53 million bbl to 375 million last
week, Energy Information Administration data showed.
Inventories at Cushing, Oklahoma, the delivery point for WTI
traded in New York, fell by 650,000 bbl to 20.3 million, the
least since November 2008. Refineries operated at 93.8% of
capacity, the highest level since August 2005.
Its the increase in refinery
activity that got us this
7.53 million barrel decline in crude stocks, said Tim
Evans, an energy analyst at Citi Futures Perspective in New
York. There was also a big drop at Cushing, which is
also giving the market support.
WTI for August delivery rose $1.24, or 1.3%, to close at
$101.20/bbl on the New York Mercantile Exchange. It was the
biggest gain since June 12. July 15's settlement of $99.96
was the lowest since May 6.
Brent for August settlement, which expired on July 16,
slipped 17 cents to end the session at $105.85 on the
London-based ICE Futures Europe
exchange. It was the lowest
close since April 7. The September contract gained 29 cents
to settle at $107.17.
an benchmark closed at a
$4.65 premium to WTI, the narrowest since April 11.
Crude stockpiles were project
ed to decrease 2.75 million
bbl, according to the median of 10 analyst project
ions in a Bloomberg survey.
US crude stockpiles slipped to the lowest level since the
week ended March 7, the report showed. Inventories rose to
399.4 million barrels in the week ended April 25, the most
since the EIA began publishing weekly data in 1982.
Crude production rose 78,000 bpd to 8.592 million last week,
the most since October 1986. Output has surged this year as a
combination of horizontal drilling and hydraulic fracturing,
or fracking, has unlocked supplies trapped in shale
formations, including the Bakken in North Dakota and the
Eagle Ford in Texas.
runs climbed to 16.6
million bpd, the most in weekly data going back to 1989.
This report was mildly bullish because you cant
ignore a huge crude number, said Michael Lynch,
president of Strategic Energy & Economic Research in
Winchester, Massachusetts. Rather lackluster demand
creates some clouds for the oil price bulls.
Gasoline consumption averaged over the four weeks ended July
11 dropped 51,000 bpd to 8.99 million, down 0.7% from a year
earlier, EIA data show. Total fuel demand rose 1% to 19.2
million barrels over the four weeks.
Supplies of distillate fuel, a category that includes heating
oil and diesel, rose 2.53 million bbl to 124.3 million, the
most since January, the EIA data showed. Gasoline inventories
increased 171,000 bbl to 214.5 million.
Gasoline for August delivery fell 1.61 cents, or 0.6%, to
$2.8825/gal on the Nymex. It was the lowest settlement since
US gasoline pump prices fell 0.7 cent to $3.598/gal
nationwide on July 15, the lowest since April 7, according to
AAA, the largest US motoring group.
Ultra low sulfur diesel for August delivery rose 0.23 cent to
close at $2.8578/gal.
The products are under some pressure because the demand
numbers arent looking that good, said Bob Yawger,
director of the futures division at Mizuho Securities in New
York. If this continues there will be a lot of gasoline
laying around in storage by the end of the summer.
WTIs decline below $100/bbl on July 15 was excessive
and further losses may be unsustainable, a chart indicator
shows. The 14-day relative strength index closed below 30 for
the first time since Nov. 5, a level that typically signals
the market is oversold. July 16s reading is about 37.7.
The market was really beat down yesterday, Yawger
said. The RSI was signaling that it was ready for a
Chinas GDP growth accelerated for the first time in
three quarters after the government expedited spending and
freed up more money for loans to counter a property slump,
figures from the statistics bureau in Beijing show.
The Asian nation will account for 11% of global oil demand
this year and the US 21%, according to the International
Energy Agency in Paris.
I would expect price to be higher given the large
inventory drop and the Chinese growth data, said Rob
Haworth, a senior investment strategist in Seattle at US Bank
Wealth Management, which oversees about $120 billion of
assets. Traders seem gun-shy. It could be because they
expect to see Libyan supply come back.
Libya is now pumping about 550,000 bpd of crude, according to
the state-run National Oil Corp. The country produced 300,000
bpd in June, according to Bloomberg estimates.