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Oil rises on falling US gasoline supplies

Oil rises on falling US gasoline supplies

Oil prices rose Thursday above US$116 a barrel as investors considered a fall in U.S. gasoline inventories and a possible output tightening by OPEC at its next meeting in September.
By midday in Europe, light, sweet crude for October delivery was up US$1.37 at US$116.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose US$1.01 overnight to settle at US$115.56 a barrel.
The September contract expired Wednesday after rising 45 cents to US$114.98 a barrel.
In London, October Brent crude rose US$1.47 to US$115.83 a barrel on the ICE Futures exchange.
The price gains came despite a huge rise in U.S. crude inventories. But not all U.S. fuel supplies were abundant.
Gasoline inventories shrank by a larger-than-expected 6.2 million barrels to below-average levels in the week ended Aug. 15, the U.S. Energy Department's Energy Information Administration said Wednesday. Meanwhile, distillate inventories _ which include heating oil and diesel fuel _ rose by less than expected, the EIA said.
That was enough to offset a hefty 9.4 million barrel rise in U.S. crude stocks last week when the average analyst forecast had been for a 1.7 million barrel increase, according to energy information provider Platts.
"That report had something for everyone," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. "On the one hand, the crude inventory buildup was quite strong, but the gasoline draw was also very prominent."
Investors are also trying to anticipate the outcome of the next Organization of Petroleum Exporting Countries meeting in early September, as supply concerns could rise further if members of the cartel decide to lower their output in response to slower demand. Venezuelan Oil Minister Rafael Ramirez said he might propose an output cut at the next OPEC meeting.
"The market is looking to the OPEC meeting," Moore said. "Before that meeting, we're going to get quite a few statements from OPEC officials expressing opinions. In the end, I don't expect a production cut, but they may push for greater adherence to output quotas."
U.S. energy consultancy Cameron Hanover noted in its daily market report that some members of the oil group were "terrified of allowing Western countries to build any kind of cushion for the unexpected, because it has the potential to return prices to normal or sustainable economic levels" and interfere with OPEC's ability to keep building massive foreign currency reserves.
"Many wanted oil prices to keep rising forever," the report said.
Oil prices have rebounded after falling about US$35, or nearly a quarter, from their all-time trading record US$147.27 on July 11. Many investors expect that high gasoline prices and slowing economic growth in the U.S., Europe and Japan will undermine global energy demand.
Prices were supported Thursday by a weaker dollar compared to the euro. The 15-nation euro traded was up to US$1.4756, while the dollar fell to 108.81 yen. A falling greenback encourages investors to seek commodities such as oil as a hedge against inflation and a weaker dollar.
"The slide in the dollar has taken some of the wind out of the bear's sail in the energy complex," said The Schork Report edited by U.S. analyst and trader Stephen Schork.
In other Nymex trading, heating oil futures rose 3.15 cents to US$3.1950 a gallon, while gasoline prices gained 1.70 cents to US$2.9273 a gallon. Natural gas futures increased 11.3 cents to US$8.190 per 1,000 cubic feet.
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Associated Press writer Alex Kennedy in Singapore contributed to this report.


Updated : 2021-03-04 12:07 GMT+08:00