Oil Slips As Traders See Ample Supply Despite Recent Draw Downs
Crude oil futures slipped as some traders took profits on a $1 bulge, the day after a surprise government report showed a big drawdown in crude stocks last week.
Gasoline marched higher, within sight of its recent six-month high, supported by a hefty stock draw amid concern over refinery problems ahead of an expected rise in demand that begins in spring and peaks during the summer driving season.
Heating oil futures fell after gaining on Wednesday on a less-than-expected stock draw, but a cold snap in the U.S. Northeast this week may have limited losses.
The day's gasoline price strength and weakness through the rest of the complex may have been due partly to refinery issues as well as a delayed reaction to yesterday's inventory data, said Jim Ritterbusch, president and analyst at Ritterbusch & Associates in Galena, Illinois.
On the New York Mercantile Exchange, April crude settled 18 cents, 0.3%, lower at $61.64 a barrel, after trading $61.20 to $62.30. Technical resistance was charted at $62.50 with support at $61.
Crude stocks fell 4.8 million barrels to 324.2 million barrels for the week to March 2, expanding the deficit from a year ago to 17.4 million barrels. But stocks remain at the upper end of the average range for this time of year.
In London, ICE April Brent crude was down 17 cents, or 0.3%, at $62.33 a barrel, trading $61.80 to $62.84.
"Crude is trying to hold here ... it is reluctant to break through resistance above $62, with some temporary confusion here after the EIA reported a big drop in crude imports last week," said Phil Flynn, analyst at Alaron Trading in Chicago.
The EIA said on Wednesday the lower imports could have been partly due to fog-related shipping delays along the Houston Ship Channel through which tankers deliver feedstock to large refineries in the city. Operations at the channel were reported back to normal last Friday.
In any case, many analysts and traders said they expected next week's EIA report to show a rebound in crude inventories as delayed shipments get into the record books.
NYMEX April RBOB gained 3.06 cents, or 1.6% at $1.9261 a gallon, after extending session highs to $1.9350, just below resistance at $1.94. Prices hit that level on March 1, the highest since Aug. 23, 2006. The day's low was at $1.905, with suport at $1.80.
Gasoline stocks fell 3.8 million barrels, the fourth consecutive drop, to 216.4 million barrels, enlarging the year-ago deficit to 8.7 million barrels.
A heavy schedule of planned refinery maintenance work combined with some unexpected snags that has reduced overall refinery capacity to below 86%.
NYMEX April heating oil slid 0.61 cent, or 0.4%, to $1.7613 a gallon, trading $1.7475 to $1.7780. Resistance was slated at $1.79 with support at $1.72.
Distillate stocks, which include heating oil and diesel fuel, dropped 1.3 million barrels, the sixth straight week of drawdowns, to 123.2 million barrels, with a deficit from a year ago at 11.3 millions.
Supply is ample to meet demand for winter, which is coming to a close in two weeks, analysts said.
Late on Wednesday, BP unit BP Exploration (Alaska) said it had resumed production at its offshore Northstar oil field in Alaska, three weeks after a pipeline leak prompted the field's shutdown.
Output at the field, normally 47,000 barrels of oil a day, was at 70% of that rate and increasing, accorind to BP spokesman Daren Beaudo.
OPEC will be deciding production policy at its March 15 meeting in Vienna as it works to fully implement cuts of 1.7 million bpd already agreed to at recent meetings.
An official of the group said on Thursday that OPEC should not change its oil output at next week's meeting because existing supply curbs need more time to work.
"It is better now not to take any action for the coming months," said the delegate, who is attending a meeting of OPEC's Economic Commission Board this week. "The ministers need more time to see the effect of the February cuts."