WSJ: OIL FUTURES: Crude Little Changed; Product Prices Turn Lower
-- U.S. crude stocks fall more than expected
-- Middle East tensions underpin prices
-- Lofty Brent prices ease ahead of expiration
By David Bird
NEW YORK--Crude-oil futures prices were little changed early Thursday after recent support from tightening inventories in the U.S., the world's biggest oil consumer.
Analysts said that the rally in crude prices, which pushed front-month futures on the New York Mercantile Exchange to their highest level in three months Wednesday, showed some signs of sputtering in its third day. In overnight trading, the September contract hit a high of $94.85, five cents short of Wednesday's session peak.
Traders also were aggressive in taking profit early in the session in reformulated-gasoline-blendstock futures, which jumped 2.8% Wednesday to its highest level since May 1 on news of declining inventories.
Underlying Middle East tensions are likely to underpin prices near current levels, market participants said. "There's not a lot of incentive to sell," said Matt Smith, analyst at Summit Energy. He noted that tensions caused by the conflict in Syria have spilled into Lebanon, causing Saudi Arabia and other Gulf states to order their citizens to leave that nation.
U.S. economic data provided a mixed picture, as home building fell 1.1% in July after a strong gain in June. Economists had called for a 0.5% drop. But new permits rose to their highest level in four years, a possible sign of confidence for construction going forward.
Meantime, the number of U.S. workers filing applications for jobless benefits rose last week, though the overall trend for claims suggests that the labor market has improved slightly since early this summer.
Nymex September-delivery crude oil was nine cents higher at $94.42 a barrel. On the Intercontinental Exchange, North Sea Brent crude for September was 54 cents lower, at $115.71 a barrel heading into expiration at the settlement. The October contract was 28 cents lower, at $114.03 a barrel. September Brent settled Wednesday at its highest level since May 2 on tight supplies from the region.
The Energy Information Administration said Wednesday U.S. crude oil stocks fell 3.7 million barrels last week, nearly twice the level expected by analysts surveyed by Dow Jones Newswires. The EIA also said gasoline stocks dropped 2.4 million barrels, compared with expectations of a 1.7 million barrel drop. Distillates stocks (diesel/heating oil) rose by 700,000 barrels, while a modest 400,000 barrel drop was expected.
Gasoline and distillate supplies are tight in the Northeast U.S., but analysts said there is potential for fuel to be diverted to the region, rather than exported, to cover any supply snags.
September heating-oil futures were trading 0.67 cent lower, at $3.0788 a gallon, after settling at the highest level since May 3 on Wednesday.
September RBOB gasoline futures were down 2.77 cents, at $3.0568 a gallon, from Wednesday, when prices settled at the highest level since May 1.
