By Claudia Assis and Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures added to gains Wednesday after a government supply report showed crude inventories unchanged, contrary to expectations of an increase, and gasoline stockpiles rising less than expected.
Light, sweet crude for June delivery CLM11 +2.48% advanced $2.75, or 2.8%, to $99.72 a barrel on the New York Mercantile Exchange. It had traded at $98.80 just before the Energy Information Administration report.
Oil started the day in the black, recouping some lost ground after tallying a two-session decline of nearly 3%. Oil on Tuesday closed at its lowest in roughly five weeks.
Analysts polled by Platts had expected crude stockpiles to increase 500,000 barrels in the week ended May 13. A Dow Jones Newswires poll saw inventories up by 700,000 barrels.
Gasoline inventories were up 100,000 barrels in the week, the EIA said. Analysts had seen an increase of 550,000 barrels to 600,000 barrels.
The agency also said inventories of distillates, which include heating oil and diesel, decreased 1.2 million barrels, whereas analysts had expected an increase of 600,000 barrels.
The inventory numbers “gave some steam to the bull camp,” said Tariq Zahir, a managing member with Tyche Capital in New York.
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Crude could get back to $100 a barrel with the U.S. dollar slightly weaker on the day and the inventories surprise, “but we do expect these levels to be short lived,” he added.
Crude was getting oversold and due for a short-term bounce, analysts at MF Global said.
“However, after that is done, investors will likely return to discounting the slower pace of growth that we are likely going to be seeing, especially as the impact of higher rates works itself through the system,” they said.
Prices are likely to erode and “$90 is a reasonable short-term target on [West Texas Intermediate],” they added.
June gasoline RBM11 +0.69% gained 2 cents to trade at $2.94 a gallon, moderating gains from earlier.
June heating oil HOM11 +1.61% tacked on 5 cents, or 1.8%, to $2.90 a gallon, edging higher after the EIA report.
June natural gas NGM11 +0.26% traded at $4.20 per million British thermal units, up 2 cents and moderating gains from earlier in the session.
Data watch
Investors had been on edge because the American Petroleum Institute late Tuesday reported crude-oil supplies rose 2.7 million barrels in the week ended May 13.
Analysts at Canaccord Genuity had expected the EIA to show a smaller build in inventories than the API or even a draw.
“Implied oil demand appears understated compared to refinery runs,” they said in a note to clients Wednesday.
Earlier Wednesday, oil prices had seen some support from weakness in the dollar, which helped renew appetite for crude and other commodities. Read more about the reversal in metals prices.
At last check, the dollar index DXY -0.08% , which measures the performance of the U.S. unit against a basket of six major currencies, rose to 75.349, from 75.412 in late North American trading on Tuesday.
