Futures contracts for crude and petroleum products rallied on international markets Thursday with new reports of low US stocks of oil, gasoline and heating fuel. The New York Mercantile Exchange opened with a rally that wiped out Wednesday's losses on most contracts, with much of the gains coming in the last hour of trading.
The July contract for unleaded gasoline shot up 4.12� to $1.0167/gal because of low inventories and refinery outages at the start of the peak US driving season. Market volatility has triggered a high volume of trading in gasoline contracts in the past month, with a record 73,383 gasoline futures contracts traded Wednesday, with a 3�/gal loss for that day. The previous trading record was 66,539 contracts on Mar. 31, 1999.
The July contract for home heating oil also jumped 3.82� to 76.15�/gal Thursday, more than making up its 2.5� loss Wednesday.
The July contract for NYMEX light, sweet crude jumped $1.12 to $30.13/bbl, pulled along by the heavy trade in petroleum products. The August contract was up 89� to $29.31/bbl. In after-hours electronic trading, those contracts increased to $30.22/bbl and $29.37/bbl, respectively.
However, the NYMEX July contract for natural gas dropped 29.2� to $4.06/Mcf in a round of profit taking following its spectacular rise in the last few sessions.
The American Petroleum Institute reported Thursday that US gasoline stocks dropped by 2.19 million bbl the previous week, while crude inventories were down 1.74 million bbl. API reported a 1.2 million bbl increase in distillate stocks. But heating oil inventories are still low for this time of the year and may not be rebuilt to meet winter demand at this rate, analysts said.
API released its weekly inventory report a day late because of the holiday Monday. However, on Wednesday the US Department of Energy reported even bigger declines of 4.6 million bbl for oil inventories and 2.5 million bbl for gasoline, with only a 700,000 bbl increase for heating oil.
On the International Petroleum Exchange in London, the July contract for North Sea Brent rose 88� to close at $29.19/bbl after trading in the range of $28.40-$29.20/bbl Thursday. Comments by OPEC producers hinting that they are unlikely to increase production at their meeting later this month restored some backbone to that market, traders said.
But the IPE July contract for natural gas dropped 42� to $2.98/Mcf.
The average price for the OPEC basket of seven crudes increased to $28.55/bbl Thursday from $27.60/bbl the previous day.
Meanwhile, Royal Dutch/Shell Group officials predicted that world oil demand would grow by 2% this year, aided by the economic recovery in Asia, which could boost demand by an extra 1 million b/d. The International Energy Agency also has predicted that total oil consumption could increase by 2.1% this year to 77 million b/d.
