Crude Oil Rises as U.S. Distillate Fuel Supplies Decline to a Two-Year Low
Crude Oil Declines
David Paul Morris/Bloomberg
Futures slipped as much as 1.4 percent after the American Petroleum Institute said yesterday that stockpiles of the fuel increased 2.44 million barrels last week.
Futures slipped as much as 1.4 percent after the American Petroleum Institute said yesterday that stockpiles of the fuel increased 2.44 million barrels last week. Photographer: David Paul Morris/Bloomberg
Crude oil climbed to a two-week high after a report showed that U.S. inventories of diesel and heating oil tumbled to the lowest level in more than two years as consumption increased.
Oil gained 1.7 percent as the Energy Department said distillate-fuel stockpiles fell 2.04 million barrels to 141.1 million last week. Demand for the fuel advanced 10 percent to 3.98 million barrels a day, the report showed. Gasoline stockpiles rose 3.79 million barrels to 209.7 million, the biggest addition since February.
“We’re shrugging off the largest gain in gasoline stocks in a long time because of the big drop on the distillate side,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market has been range-bound and appears to be trying to decisively break out above $100.”
Crude oil for July delivery rose $1.73 to $101.32 a barrel on the New York Mercantile Exchange, the highest settlement since May 10. Prices have gained 47 percent in the past year.
Heating oil for June delivery increased 7.06 cents, or 2.4 percent, to end the session at $2.9803 a gallon in New York. Gasoline for June delivery advanced 2.34 cents, or 0.8 percent, to settle at $3.0162 a gallon on the Nymex.
Supplies of distillate fuel were projected to be unchanged last week, according to the median of 14 analyst responses in a Bloomberg News survey. Gasoline stockpiles were forecast to rise 450,000 barrels.
Distillate Demand
Distillate consumption was at the highest level since the week ended April 15, the report showed. Gasoline use dropped 0.3 percent to 9.03 million barrels a day. Total fuel demand climbed 2.2 percent to 18.9 million barrels a day.
“It used to be that gasoline would lead the complex in spring as we approached the summer driving season, and heating oil would take the lead as we approached winter,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “There is no such thing as seasonality anymore. Things have grayed dramatically in the last couple years.”
Crude oil supplies rose 616,000 barrels to 370.9 million. Stockpiles were forecast to decrease by 1.5 million barrels, according to the survey.
Refineries operated at 86.3 percent of capacity, up 3.1 percentage points from the previous week and the most since the week ended Jan. 7. A 0.5 percentage-point gain was projected in the Bloomberg News survey.
‘Extra Incentive’
“Refineries are coming out of maintenance programs and are really boosting runs,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The sharp drop in crude oil prices recently may have given refiners an extra incentive to increase operations.”
Futures touched a 31-month high of $114.83 a barrel May 2 in New York. They slipped as the dollar strengthened and crude- oil stockpiles rose.
Oil also increased after Goldman Sachs Group Inc. said yesterday that it’s turning “more bullish” on raw materials as demand improves. Goldman Sachs suggested buying crude, copper and zinc in a reversal of last month’s call to sell commodities.
“The market was pricing in a global growth story up until February, then it shifted into a supply-shock story and then within the last week or two it shifted back into a demand-driven story,” Jeffrey Currie, head of commodity research at Goldman Sachs in London, said yesterday in an interview. “We are substantially more confident when the market is focused on demand growth.”
OECD Forecast
The Standard & Poor’s GSCI Index of 24 raw materials climbed 1.8 percent to 696.77, the highest level since May 10. All of the commodities increased.
The Organization for Economic Cooperation and Development maintained its forecasts for the world economy to expand 4.2 percent this year and 4.6 percent in 2012, and raised its expectations for U.S. growth to 2.6 percent this year from 2.2 percent predicted in November.
“The global recovery is becoming self-sustaining and more broad-based,” OECD Chief Economist Pier Carlo Padoan said in the Paris-based organization’s annual economic outlook published today. The 30-member OECD represents developed countries.
Brent crude for July settlement increased $2.40, or 2.1 percent, to end the session at $114.93 a barrel on the London- based ICE Futures Europe exchange.
The Organization of Petroleum Exporting Countries will leave production quotas unchanged at its June 8 meeting in Vienna because there is enough oil to meet demand, Iraq’s Deputy Prime Minister Hussain al-Shahristani said.
No Shortage
“Looking at the figures now, I don’t see any shortage on the world market,” al-Shahristani said in a Bloomberg Television interview from Baghdad today. “OPEC will be reviewing those figures, and I expect there will be a rollover. If demand is where it is now, I don’t see any point in increasing production.”
Oil volume in electronic trading on the Nymex was 549,556 contracts as of 3:15 p.m. in New York. Volume totaled 569,773 yesterday, 17 percent below the average of the past three months. Open interest was 1.52 million contracts.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
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