EIA shows supply increase for crude but a drop for gasoline inventories
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures edged higher to reach a five-year high after report showed rising inventories of oil but declining stocks of gasoline.
Crude for November delivery (CLX10 83.71, +0.89, +1.08%) most recently added 16 cents to $82.97 a barrel on the New York Mercantile Exchange, but spent most of the morning floor trading on a roller coaster.
The contract hit a five-month high of $83.33 in electronic trading during European hours, but has kept wavering in early New York floor trading.
The Energy Department said crude-oil inventories rose 3.1 million barrels on the week ended Oct. 1, but the government also reported an unexpected decrease of 2.6 million barrels for gasoline stocks, and a decrease of 1.1 million for inventories of distillates.
Analysts polled by Platts had expected a decline of 1.3 million barrels for crude-oil stocks. Gasoline stocks were seen up 700,000 barrels, and distillates down 900,000 barrels.
A drop in gasoline demand, however, “takes some of the bullish edge” off the inventories decline, Tim Evans, an analyst with Citigroup’s Citi Futures Perspective, said in a note to clients Wednesday.
Breaking $80
Last week, oil prices broke from a lengthy stint trading between $70 and $80 a barrel, as equities rallied globally and the U.S. dollar declined.
When the greenback falls, dollar-denominated commodities become less costly for holders of other currencies.
“The energy markets are tightly correlated with the U.S. dollar and with the recent sell-off in the dollar is what has propelled the energy markets to these levels,” Tariq Zahir, a managing member with Tyche Capital Advisors in New York, said in emailed comments.
The dollar was providing some support for prices on Wednesday, as the dollar index (DXY 77.42, -0.33, -0.42%) , which compares the greenback to a basket of six other currencies, was 0.2% lower at 77.59.
Reformulated gasoline for November delivery (RBX10 2.12, +0.04, +1.68%) was flat at $2.13 a gallon. November heating oil (HOX10 2.33, +0.03, +1.07%) rose a penny to $2.31 a gallon.
Support for oil could come from the continuing strike at France’s top oil port near Marseille. The impact could spread further as workers there are scheduled to meet with refinery workers to coordinate more action, analysts at JPMorgan said in a note Wednesday.
