MW: Crude stages comeback after deeper inventories draw
By Nick Godt, MarketWatch
SAN FRANCISCO (MarketWatch) -- Crude futures rebounded Monday, turning higher as optimism surrounding a larger-than-expected decrease in oil inventories seemed to supersede worries about surprise builds in oil products such as gasoline.
Crude oil for September delivery added 36 cents, or 0.5%, to $82.89 a barrel on the New York Mercantile Exchange. Oil had made brief forays into positive territory before, but it hadn't stuck.
The Department of Energy's Energy Information Administration reported a decline of 2.8 million barrels for the week ended July 30. That compares with expectations of a decline around 1.2 million barrels.
The EIA reported gasoline stocks rose 700,000 barrels, which compares with expectations of a decline around 870,000. Stocks of distillates increased 2.2 million barrels, the EIA said. Analysts surveyed by Platts had expected a rise of 1.2 million.
The report was mixed, said Tim Evans, an analyst with Citigroup's Citi Futures Perspectives, in a note to clients.
Crude stocks fell on sharply lower imports and an unexpected increase in refinery runs, but the jumps for distillates and gasoline aren't being matched by higher demand, he said. Moreover, the bearish gain in gasoline stocks was counter-seasonal, he added.
Reformulated gasoline for September delivery also reverted to gains, most recently up a penny to $2.21 a gallon. Heating oil, a distillate, for September delivery also added a penny, or 0.3%, to $2.21 a gallon.
Oil has rallied this week, hitting a fresh 12-week high on Tuesday. Prices got their first try at staying positive after a report showed an expansion for the services sector in the U.S., but quickly moved back to the red.
Futures had also pared losses after payroll processor ADP said that U.S. private-sector employment increased by 42,000 in July. Read more about the ADP report.
The increase was "more than expected and has helped buoy oil prices," according to Mike Fitzpatrick, energy analyst at MF Global. "As a harbinger of U.S. payrolls, to be reported Friday, it suggests that with employment growing, a positive effect on energy demand growth may be subsequently anticipated."
Meanwhile, the dollar, which stayed weaker earlier on the week and had helped oil rally, was stronger on Wednesday. The dollar index (DXY 80.97, +0.37, +0.46%) , which compares the U.S. unit to a basket of six other currencies, rose 0.4% to 80.94 on the day. Read more about the dollar in Currencies report.
