NYMEX oil rises above

NYMEX oil rises above $41 as gasoline worries persist

May 19, 2004 - Reuters Power News
Author(s): Reuters

NEW YORK, May 18 (Reuters) - NYMEX crude oil futures rose above $41 a barrel midsession on Wednesday as traders said an increase in gasoline stocks in the latest government data still was not enough to thwart potential supply shortages this summer. NYMEX crude fell below $40 early as dealers initially reacted to data in the Energy Information Administrations's report for the week to May 14, which showed a rise in gasoline stocks, offsetting a small draw in crude stocks. In that early price action, speculative funds sold off more gasoline positions, keeping both crude oil and distillate futures on the defensive, traders said. But gasoline selling abated as the EIA report showed that most of the build in gasoline stocks was on the West Coast, which is geographically isolated from the rest of the nation's petroleum regions and usually does not affect NYMEX futures. "The gasoline data are neutral to supportive as the build occurred mostly in PADD 5 (West Coast) and demand is still solid at 9.1 million barrels per day (bpd)," said Tom Bentz, market analyst at BNP Paribas Commodity Futures in New York.

At 12:20 p.m. EDT (1620 GMT), NYMEX crude for June delivery was up 65 cents at $41.19 a barrel, after falling early to the session low of $39.90. On Tuesday, NYMEX crude ended down $1.01 at $40.54, shifting lower for the first time in six sessions, on profit-taking after rising to $41.85 on Monday, the highest price for prompt crude since NYMEX launched the crude oil futures contract in 1983. With the June contract expiring on Thursday, July crude moved up with the prompt month, trading 70 cents higher at $41.120 and dealing between $39.90 and $41.29. NYMEX June gasoline was up 2.91 cents to $1.4160 a gallon, trading between $1.3620 and $1.4220.

Gasoline futures have been on a record-breaking binge since April 12, catapulting prices to $1.4250 on Friday before values eroded on profit-taking on Monday. The EIA said commercial crude stocks held by refiners fell 1.1 million barrels to 298.9 million barrels, which is 17.1 million barrels below the five-year average for this time of year. The drawdown ran counter to average expectation of a 1.8 million barrel build in a poll of analysts conducted by Reuters on Monday, although two of eight forecasters had predicted a draw of between 1.0 million and 3.0 million barrels. The stock build came as refinery run rates came off by 0.7 percentage point to 95.3 percent of operating capacity against forecasts for a 0.3 percentage point rise in the Reuters poll.

Crude imports were up a mere 13,000 bpd to average 9.9 million bpd, much lower than analysts expectations that crude inflow would exceed 10 million bpd. Gasoline stocks rose 1.2 million barrels, just below average expectations for a 1.4 million barrel build in the Reuters poll. The rise, after a small draw in the week to May 7, still has supplies down 7.9 million barrels below the five-year average. Gasoline imports increased by just 36,000 bpd to average 955,000 bpd. Gasoline demand fell to 9.1 million bpd from almost 9.4 million bpd the week before, indicating some lull in distributor restocking before demand picks up again ahead of the Memorial Day weekend at the end of this month.

"This build in gasoline still has gasoline stocks tight ahead of the (Memorial Day) holiday weekend (and) stocks are not building fast enough to ease supply concerns," said Phil Flynn, energy market analyst at Alaron Trading in Chicago. Memorial Day is the traditional start of the peak summer driving season in the United States, which is the world's biggest consumer of motor fuel. Distillate supplies, including heating oil and diesel fuel, were up 1.7 million barrels at 109.2 million barrels, reducing the five-year average deficit to 3.0 million barrels. The average expectation in the Reuters poll had been for a 1.2 million barrel build.

NYMEX June heating oil was up 2.45 cents at $1.0380 a gallon, trading from $1.0020 to $1.0440. The contract is still down from Friday's peak of $1.0530, the highest level for prompt heating oil since prices hit $1.13 on March 10, 2003.