BS: Oil Rises as Crude Supplies Drop, Refinery Activity Gains
Oil rose as the U.S. Energy Department reported that crude supplies dropped and refineries operated at the highest rate in almost five years.
Futures climbed as much as 2.9 percent as inventories fell 4.7 million barrels to 378.2 million last week, more than three times the decline forecast in a Bloomberg survey of analysts. Refineries operated at 92.7 percent of capacity, the highest rate since July 2007. Stockpiles of gasoline and distillate fuel increased more than projected.
“When refineries are operating at high rates, it’s pretty natural that crude stocks will post a big decline and there will be a build in product supplies,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.
Oil for August delivery rose $2.36, or 2.8 percent, to $86.27 a barrel at 12:31 p.m. on the New York Mercantile Exchange. Oil traded at $85.45 before the release of the report at 10:30 a.m. Prices are down 13 percent this year.
Brent oil for August settlement climbed $2.20, or 2.2 percent, to $100.17 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate crude, the grade traded in New York, narrowed to $13.90 from $14.06 yesterday.
Crude oil stockpiles at Cushing, Oklahoma, the delivery point for WTI, declined 859,000 barrels to 46.8 million last week, the biggest percentage drop since January.
‘Taking Bite’
Gasoline stockpiles rose 2.75 million barrels to 207.7 million, more than five times the gain of 500,000 barrels projected in the Bloomberg survey. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 3.11 million barrels to 120.9 million. A 625,000-barrel increase was projected.
“The large gain in product stocks is taking a bite out of the gain you would usually expect when there’s such a big drop in crude inventories,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The product supply number points to weak fundamentals.”
Total fuel use dropped 1.1 percent to an average 19 million barrels a day in the four weeks ended July 6, the biggest decline since February. Gasoline consumption fell 0.6 percent to 8.87 million barrels a day during the same period, leaving demand 3.9 percent lower than a year earlier.
“The demand numbers are anemic and it’s important to remember that crude stocks are barely off their 22-year highs,” McGillian said.
U.S. crude oil inventories increased to 387.3 million barrels in June, the highest level since 1990.
Automobile Sales
Futures also rose as more cars were sold in China. Passenger-vehicle sales exceeded analysts’ estimates for a fourth consecutive month after automakers increased shipments ahead of scheduled shutdowns for the summer. China is the world’s second-biggest crude-consuming country after the U.S.
Wholesale deliveries of passenger vehicles rose 16 percent to 1.28 million units last month, the China Association of Automobile Manufacturers said in a statement today. That compares with the 1.27 million-unit average estimate of 14 analysts surveyed by Bloomberg.
Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $83.40 a barrel today, according to data compiled by Bloomberg. Futures rebounded yesterday after trading near that indicator. Buy orders tend to be clustered close to chart-support levels.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
