Despite a large drop in crude inventory, the June contract failed to hurdle over 60 on the last trading day but just gained 1.1% to close at 59.65. The July contract also edged slightly higher, by 0.9%, to settle at 60.1 Tuesday. Gasoline price on the other hand surged by more than 3% yesterday, probably due to the increase in demand as well as the refinery disruption in Flint Hills.
The industry-sponsored API reported 4.47 mmb withdrawal of crude oil inventory for the week ended May 15 as imports remained low. The result was better than market expectation of -0.68 mmb. Gasoline stockpile also fell sharply by 5.4 mmb, compared with consensus of -0.98 mmb, as both demand and refinery runs rose. Same as previous weeks, increase in distillate inventory was higher than expected. It gained 1.41 mmb as imports rose but demand dropped.
While the market awaits the report by the US Energy Department, analysts forecast that crude inventory probably declined 1.15 mmb to 369.5 mmb while gasoline stockpiles might have dropped 1 mmb. Distillate inventory probably gained more than 2 mmb during the week.
News said that the catalytic cracker caught fire at Flint Hills Resources' Corpus Christi plant which has a capacity of 0.3M bpd. The market concerns that it will affect gasoline supply as it's usually peak season for gasoline refinery operations from late May to September.
Pullback in stock markets in US session after weaker-than-expected housing data was main factor haltering the rally in oil price. US' housing starts fell to 458K units in April, worse than consensus of 530K unit and 511K units in Marc. The number of building permits also decreased to 494K units during the month, compared with 530K as anticipated and 525K in March. The Dow Jones Industrial Average recouped earlier gains and ended the day with 0.34% decline while S&P 500 Index slid 0.17% to close at 908. The gauge soared to intra-day high at 916.39.
Natural gas plunged 5.4% while the rest of the energy complex rose. The rally in the previous weeks obviously lost steam as the market put the focus again on the weak gas fundamentals. The US Energy Department said that industrial demand for gas may drop 8% yoy in 2009 while overall US consumption will decline 1.9% this year.
Gold price continues to trade narrowly with upward bias today after adding 0.5% Tuesday. USD's weakness helped gold push higher. The dollar index dropped to 82.1 while against the euro, the USD slid to 1.363. It's quite impressive that investors continue to allocate capital to gold investment as risk appetite has improved significantly recently. We believe it's because the market is broadly bearish on the dollar in the medium term and the longer term inflationary risk is looming
