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Crude futures rose to six week high after withdrawal storage Original Source Link: (May no longer be active)
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Nymex Oil Rises to Six-Week High on Crude, Fuel-Supply Concerns
July 14 (Bloomberg) -- Crude-oil futures rose to a six-week high after the U.S. government reported the biggest withdrawal of oil from storage in three months amid surging fuel demand in the world's biggest gasoline market.
U.S. oil inventories fell 2.1 million barrels last week as refineries operated at close to maximum capacity, the Energy Department said today. Two-thirds of the decline occurred on the West Coast, which includes California, the biggest gasoline- consuming state.
Fuel ``demand has been growing,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``People need to see another 30 million barrels of crude socked away in the U.S.'' for concern about possible Middle East supply disruptions to ease.
Crude oil for August delivery was up $1.61, or 4.1 percent, to $41.05 a barrel at the 2:30 p.m. close of trading on the New York Mercantile Exchange. A settlement at that level would be the highest closing price since the record settlement of $42.33 on June 1.
The futures have topped $40 just 25 times since the Nymex contract began trading in 1983. Twenty of those have occurred since May 11. The other five were in September and October 1990.
Prices are up 26 percent so far this year as record demand in the U.S. and China eroded inventories and Iraqi insurgents, Saudi Arabian terrorists and labor strikes in Nigeria and Norway raised concern about the reliability of the world's crude-oil supplies.
Gasoline Rallies
Gasoline for August delivery surged 3.07 cents, or 2.4 percent, to $1.316 a gallon on the Nymex, the first increase in four sessions. U.S. retail prices averaged $1.91 a gallon today, up 26 percent from a year ago, according to AAA, formerly the American Automobile Association.
New York heating-oil futures also rose, gaining 2.9 percent to $1.092 a gallon. Settlement at that price would be the biggest daily gain since July 1.
The International Energy Agency yesterday raised its forecast for 2004 global oil demand by 0.4 percent from a month ago and said consumption will jump another 2.2 percent in 2005.
The Paris-based agency, formed to represent the interests of oil-consuming nations after the 1973 Arab oil embargo, also raised its global oil-consumption figures going back to 2000.
U.S. refineries operated last week at 95.2 percent of capacity, 0.5 percentage point above the five-year average for that time of year, the government said.
Last week's 2.1-million-barrel draw on U.S. commercial oil stockpiles was quadruple the 500,000-barrel median estimate of 10 analysts surveyed by Bloomberg.
Inventories by Region
West Coast stockpiles dropped by 1.4 million barrels to 52.4 million, the fourth decline in five weeks. Inventories in that region are at their lowest since April 23.
Oil stockpiles also declined in the Midwest and Gulf Coast regions and were unchanged in the Rocky Mountains and Pacific Northwest. East Coast inventories rose by 800,000 barrels, halting two weeks of declines.
Crude shipments to U.S. ports exceeded an average of 10 million barrels a day for an eighth consecutive week, the longest such streak on record, according to the report.
Oil-tanker rates for shipping crude from the Middle East to the U.S. rose to the highest in almost five months today after Saudi Arabia booked a 2-million-barrel vessel.
Vela International Marine Ltd., the shipping arm of Saudi Aramco, the world's biggest oil company, booked a vessel to load on Aug. 3 and sail to the U.S. Gulf Coast, Oslo-based shipbrokers O-J. Libaek said in a report.
Gasoline vs Diesel
U.S. refiners drew 200,000 barrels of gasoline from storage last week to augment a 1.3 percent rise in output that raised daily gasoline production to a seven-week high of 8.84 million barrels, the Energy Department report showed.
Refiners shifted more production capacity to gasoline and away from distillate fuels such as diesel, the government said.
Gasoline accounted for 55 percent of the crude oil and other feedstocks processed at U.S. refineries last week, up from 53 percent a week earlier. The share devoted to distillates fell to 25 percent from 26 percent the previous week. Jet fuel accounted for 10 percent, unchanged on the week.
Exxon Mobil Corp. last week said it planned to reduce operations in a gasoline-producing unit at the largest U.S. refinery for a nine-day period that ends Monday, according to the Texas Commission on Environmental Quality. Exxon's Baytown, Texas, refinery can process 516,500 barrels of oil a day.
BP Plc plans to shut a unit at its Texas City, Texas, plant used to reduce sulfur in diesel and other distillates for 24 hours on Saturday, according to a report the company filed last week with state regulators. The Texas City refinery is the third- biggest in the U.S.
Last Updated: July 14, 2004 14:52 EDT
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