By the OGJ Online Staff
HOUSTON, Aug. 28 -- Oil futures prices climbed Tuesday in international markets as traders anticipated a bullish report on US inventories.
They weren't disappointed. After the close of US trade, the American Petroleum Institute reported the drawdown of a whopping 6.8 million bbl of gasoline from US stocks last week -- more than triple the amount expected by some analysts.
That confirmed strong market demand for gasoline, despite other evidence of a softening economy. Moreover, the US is heading into its 3-day Labor Day weekend Saturday, with motorists starting to hit the roads late Friday in what is traditionally the last peak driving period of the summer.
The American Automobile Association predicted 33.2 million US residents will travel 50 miles or more during the holiday, with 27.7 million expected to go by motor vehicle (OGJ Online, Aug. 27, 2001).
The latest agreement by members of the Organization of Petroleum Exporting Countries to cut production by 1 million b/d also officially goes into effect Saturday. But that move has already been factored into market prices.
API said US crude stocks increased by 2 million bbl last week, while distillate inventories were up by 1.2 million bbl.
On the New York Mercantile Exchange, the October contract for benchmark US sweet, light crudes jumped 50¢ to $27.17/bbl Tuesday, while the November contract soared by $1.02 to $27.80/bbl.
Home heating oil for September delivery climbed by 2.47¢ to 77.48¢/gal, and unleaded gasoline for the same month gained 0.69¢ to 84.51¢/gal.
Reports of increased tensions in the Middle East also helped boost futures prices for oil and refined products, analysts said.
However, the September contract for natural gas continued to fall, down 12.9¢ to $2.42/Mcf on the NYMEX.
In London, North Sea Brent crude futures broke resistance at the $26/bbl level on the International Petroleum Exchange in bullish anticipation of the US market. But some analysts said it was unlikely to move beyond $26.50/bbl.
That was before API's surprise revelation of US gasoline inventories, however.
The October Brent contract settled at $26.47/bbl Tuesday, up 52¢ for the day after trading in the range of $25.80-$26.55/bbl. The September natural gas contract plunged 10.2¢ to the equivalent of $2.50/Mcf on the IPE.
The average price for OPEC's basket of seven crudes gained 16¢ to $24.67/bbl Tuesday as the group's board of governors convened in Vienna ahead of the next regular OPEC conference on Sept. 26.
