MARKET WATCHOil prices up on anticipated strong gasoline inventory draw

Crude oil prices were up again Apr. 24 due to anticipation of a larger-than-expected draw of US gasoline inventories—the 11th straight week of declines, analysts at Raymond James & Associates Inc. said.

By OGJ editors
HOUSTON, Apr. 25 -- Crude oil prices were up again Apr. 24 due to anticipation of a larger-than-expected draw of US gasoline inventories—the 11th straight week of declines, analysts at Raymond James & Associates Inc. said.

The US Energy Information Administration released its weekly petroleum inventories report Apr. 24, in which gasoline inventories declined again. "This was a neutral petroleum inventories update, with a large build in crude offsetting a draw in gasoline," Raymond James analysts said. Overall, total petroleum inventories fell by 300,000 bbl.

"Although this was a neutral report, crude prices traded up on the larger-than-expected draw in gasoline inventories and the large drop in refinery utilization," Raymond James analysts said, adding, "Traders' concerns are increasing about the US gasoline supply situation, as we head into the summer driving season. The decrease in refinery utilization, over the prior week, contributed to the larger-than-expected draw in gasoline stocks."

Gasoline inventories are now well below the 5-year range, Raymond James analysts said, adding, "Also of note, US motor gasoline demand is up, on a 4-week moving average basis, 2.5% compared to the same period last year."

EIA said Apr. 25 that US gasoline inventories fell again in the week ended Apr. 20, dropping by 2.8 million bbl to 194 million bbl—"well below the lower end of the average range," EIA said.

US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 2.1 million bbl compared to the previous week. "At 334.5 million bbl, US crude oil inventories are in the upper half of the average range for this time of year," EIA reported.

Energy prices
The front-month June crude contract traded as high as $66.30/bbl before finishing at $64.58/bbl, down $1.31 for the day on the New York Mercantile Exchange. The July position lost $1.22 to $65.89/bbl.

On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.44 to $63.91/bbl. Heating oil for May delivery fell 4.83¢ to $1.85/gal. The May contract for reformulated blend stock for oxygenate blending (RBOB) fell by 1.82¢ to $2.21/gal.

The May natural gas contract jumped by 3.6¢ to $7.598/MMbtu on NYMEX. On the US spot market, natural gas at Henry Hub, La., also gained, up 32.5¢ to $7.57/MMbtu.

The average price for the Organization of Petroleum Exporting Countries' basked of 11 benchmark crudes increased by 84¢ to $63.76/bbl on Apr. 24.

More in General Interest