Crude oil stocks inventories shot up 9.4 million barrels last week, catching the bean counters by surprise. Oil patch watchers had forecast a much more modest 700,000-barrel increase and maybe, at the outside, a 1.7 million barrel uptick. Now, with nearly 306 million barrels on hand, crude supplies are average for this time of year, according to the U.S. Energy Department.
Oil futures had edged higher overnight following a key reversal Tuesday when the September contract gained $1.66 per barrel, or 1.5%, to settle at $114.53. A key reversal session is characterized by an opening below the previous day's close, the making of a new low, followed by a close higher than the previous day's high. Truth be told, though, it wasn't much of a reversal. Tuesday's price range, at only $2.33, was not very wide and volume was sluggish.
Shares of the United States Oil Fund (USO) gained 94 cents, or 1%, to close at $93.68 Tuesday.
Ahead of the inventory report's release, September NYMEX futures opened $1.42, or 1.2%, higher in NYMEX floor trading this morning. USO opened 94 cents, or 1%, higher at $93.68 per share.
NYMEX Crude Oil (Sept. '08)
As it turns out, analysts set their mark for last week's refinery usage at 86.3%, a little high. Refineries, says the Energy Department, operated at 85.7% of capacity, down 0.2% from the previous week. Gasoline production ramped up to an average of 9.1 million barrels per day, while distillate fuels, including heating oil and gasoline, were cranked at out at a higher 4.4-million-barrel-per-day pace.
September heating oil went into the overnight session higher due to short covering on Tuesday and opened with nearly 4 cents per gallon, or a 1.2%, uptick in NYMEX floor trading today. The United States Heating Oil Fund (UHN) closed up 1.2% at $50.04 per share Tuesday.
Almost as embarrassing as the missed crude oil call, analysts' predictions for gasoline stocks were way off. Inventories were expected to decrease by some 3 million barrels, but instead fell by 6.2 million barrels.
On Tuesday, September unleaded gas closed higher, posting its own key reversal. The bullish tone was reflected in the share price of the United States Gasoline Fund (UGA) which closed $1.44, or 2.8%, higher at $53.55. Gasoline futures jumped 1.7%, or 5 cents per gallon, at this morning's open.
Year-over-year demand for motor fuels has declined 1.6% by Energy Department estimates.
The bright spot on analysts' scorecard were their calls for distillate stocks. Forecasts for a 500,000-barrel increase were dead-on.
Distillate fuel demand is up 3.3% over year-ago levels, prompting refiner Valero Energy Corp. to break ground on a $2.4 billion expansion of its refinery in Port Arthur, Texas. The project will increase the refinery's daily crude distillation capacity from 325,000 barrels to 415,000 barrels, with an emphasis on increased production of ultralow-sulfur diesel fuel.
As of Tuesday's close, the spot NYMEX crack spread stood at 17 cents a gallon, yielding a refining margin of 6.3%. Last week, the spread was 18 cents. (For background on the spread, see "Time For Crack Spreads?".)
NYMEX Spot Refining Margins
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This article has 2 comments:
- jegan ;-)
- 687 Comments
Aug 20 07:05 PM- fran
- 148 Comments
Aug 21 02:03 PMperhaps the trader/business hedger cares. if so they'd best have better alternative info sources than the gov't.
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