Inventories report sent prices higher, but boost short-lived
By Claudia Assis and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures veered between small gains and losses Thursday, feeling the pinch of a stronger dollar but getting a boost from a steep decline reported in U.S. inventories last week.
Crude for August delivery CLQ2 -0.51% dropped 16 cents, or 0.2%, to $87.51 a barrel on the New York Mercantile Exchange.
Prices traded lower for most of the floor session but turned positive after the Energy Information Administration said crude supplies declined 4.3 million barrels in the week ended June 29. Analysts polled by Platts had expected a decline of 2 million barrels.
The government also reported an increase of 200,000 barrels for gasoline inventories and a decline of 1.1 million barrels for supplies of distillates. The analysts surveyed by Platts had expected gasoline stockpiles to come in unchanged from the prior week and an increase of 500,000 barrels for distillates. The report was delayed a day due to Fourth of July holiday.
August gasoline RBQ2 +1.70% reversed course, up 5 cents, or 1.9%, to $2.78 a gallon. August heating oil HOQ2 +0.24% gained 1 cent, or 0.5%, to $2.77 per gallon.
Traders earlier had been lukewarm to news that the European Central Bank delivered an interest-rate cut and that the Bank of England announced additional stimulus measures, as widely expected.
The People’s Bank of China also acted, cutting its benchmark lending and deposit rates. The central bank announced more relaxed rules on lending as well.
The front-month contract had jumped $3.91, or 4.7%, in Tuesday’s Nymex floor session, aided by geopolitical concerns over the Middle East and investors’ hopes for the central banks.
The drop on Thursday came as the ICE dollar index DXY +0.76% , which measures the greenback’s performance against a basket of six major global currencies, rose to 82.855 from 82.132 in North American trade late on Wednesday.
A stronger dollar is a negative for dollar-denominated commodity prices.
Oil futures also got a boost from U.S. equities. Stocks opened lower, but traded off session lows and the Nasdaq Composite COMP +0.16% reversed higher.
Stocks initially got dragged down by concerns about the European Central Bank’s warning of further downside risk for the euro zone.
That overshadowed positive U.S. data, including a report showing a June pickup of private-sector jobs and a decline in the number of people submitting first-time applications for jobless benefits last week.
Meanwhile, natural gas for August delivery NGQ12 +0.41% kept its gains, advancing 1 cent, or 0.4%, to $2.91 per million British thermal units. The gas-in-storage inventories report is delayed to Friday because of the U.S. holiday.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
