Oil complex rebounds on technical bounce, equities despite bearish
EIA data
New York (Platts)--15May2013/325 pm EDT/1925 GMT
The oil complex shrugged off largely bearish US Energy Information
Administration data Wednesday as a rise in equities coupled with a
technical bounce halted a four-day slide in June crude futures.
NYMEX June crude rallied towards the close, settling 9 cents higher at
$94.30/barrel. Front-month crude had traded as low as $92.13/b following
the release of EIA stock data.
ICE June Brent settled $1.08 higher at $103.68/, widening by nearly $1/b
the spread between the two crudes to $9.38/b.
NYMEX June RBOB rose 2.94 cents to settle at $2.8670/gal. Heating oil
rose 71 points to settle at $2.8801/gal.
"The market is rapidly approaching the period when inventories
decline," said Confluence Investment Mgt. market strategist Bill
O'Grady, regarding US crude stocks.
US commercial crude stocks fell a surprising 624,000 barrels to 394.89
million barrels for the reporting week ended May 10 on a jump in
refinery runs, US Energy Information Administration data showed
Wednesday.
Analysts surveyed Monday in a Platts analysis expected US crude stocks
to rise 300,000 barrels. The decline was more in line with the EIA
five-year average, which shows US crude stocks over this reporting week
begin a long drawdown period into the summer.
That said, US crude stocks remain amply supplied, sitting just over 9%
above the EIA five-year average.
"This maybe the week that signals the time for increased runs has come,
and a pick up gasoline demand as we approach driving season," O'Grady
said.
"But the biggest issue laying in the weeds is Syria and the Obama
Administration is trying to avoid a mess there, which is probably wise."
A news report of Israel warning it may strike Syria again likely
supported the rebound throughout the complex.
"The compression between Brent and WTI is going to be difficult to
sustain if conflict in Syria continues this way," O'Grady said. "The
spread is probably going to stay between $5-$15/b, with [NYMEX] crude
between $85-$100/b. These are the parameters until the market uncovers
some of these other issues." Equities continued to surge to record
highs, with the Dow Jones Industrial Average up 24.25 points at 15,239
and the S&P 500 up 3.36 points at 1.653.7 around the NYMEX settle.
The breakout to the upside in NYMEX crude was probably limited by the
recent strength in the dollar which continued apace, with the US Dollar
Index up 2.3% at 83.83 around the NYMEX settle.
NYMEX crude and products futures had been sharply lower immediately
following the bearish EIA data, which showed Cushing, Oklahoma, crude
stocks rose 575,000 barrels to 49.724 million barrels. RBOB hit an
intraday low of $2.7704/gal shortly after EIA data showed USAC gasoline
stocks rose 1.8 million barrels to 63.348 million barrels.
And June heating oil hit an intraday low of $2.8193/gal after EIA data
showed Gulf Coast ULSD stocks rose 2.5 million barrels to 31.579 million
barrels.
"We sold off pretty hard earlier," Tradition Energy analyst Addison
Armstrong said, regarding NYMEX crude. "We traded through the 100-day,
the 50-day and the 200-day moving averages, so what we're looking at
could just be a strong technical bounce. We were down four straight
days. Normally we don't get a trend lasting more than five days."
--James Bambino,
james.bambino@platts.com --Edited by Richard Rubin,
richard.rubin@platts.com
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