Oil Finishes Lower On Sailors' Release, Increased Crude Inventories
U.S. crude oil futures ended lower on Wednesday on U.S. government data showing crude stocks rose by a larger-than-expected volume last week and as international tensions eased after Iran said it was releasing 15 captured British sailors and marines.
Prices had fallen as low as $63.56 earlier in the day after Iran's president said that captured British Royal Navy personnel would be released.
President Mahmoud Ahmadinejad later was shown on Iranian television wishing "good luck" to the Britons who had been detained and joked with them at a ceremony to mark their release.
An adviser to Iran's president said the British sailors and marines would be handed over to the British embassy in Tehran on Thursday and would then leave, Iran's Mehr News Agency reported.
Gasoline futures extended the day's highs, rising more than 9 cents, or 4.6%, on data showing a much larger-than-forecast stock draw last week.
But the U.S. Energy Information Administration later said that the 5-million-barrel drawdown for the week to March 30 on gasoline included 2 million to 3 million barrels that should have been included in the previous week's data.
"We had to bite the bullet and adjust last week," said Laurie Falter, an oil industry economist for the EIA, which is the statistical arm of the Department of Energy.
On the New York Mercantile Exchange, May crude settled down 26 cents, or 0.4%, at $64.38 a barrel, trading $63.56 to $65.09.
In London, May Brent crude gained 1%, trading from $66.93 to $68.52.
NYMEX May RBOB gasoline jumped 8.77 cents, or 4.4%, at $2.1054 a gallon. It traded from $1.9989 to $2.11.
Gasoline's recent high was $2.1488, hit on March 29, the highest since Aug. 10's $2.203.
"Whether the stocks were drawn last week or the week before, the fact of the matter is we're still down on barrels here," said Mark Waggoner, president of Excel Futures in Huntington Beach, California.
"Having said that, however, I think that gasoline has risen way too far and could pull back ... gasoline futures are now backwardated because refineries are going to raise production with the summer driving season coming up," he added.
Backwardation is a situation in which futures prices are lower in each succeeding delivery month. June RBOB gasoline traded at $2.548, up 4.66 cents, or 2.3 percent.
NYMEX May heating oil ended up 2.57 cents, or 1.4%, at $1.8644 a gallon, trading $1.82 to $1.8661. Prices hit a $1.9055 high on March 30, the highest since Sept. 7th's $1.9236.
The EIA said domestic crude stocks rose 4.3 million barrels to 332.7 million barrels, far more than the 600,000 barrel average increase forecast by analysts in a Reuters poll.
Crude imports rose more than expected, by 613,000 barrels a day to 10.25 million bpd, while refinery runs were unchanged at 87% of capacity against the average forecast for a 0.6% run-rate rise.
Crude supplies rose after a surprise draw of 900,000 barrels the week before.
Gasoline inventories fell a steep 5 million barrels to 205.2 million barrels, dwarfing the 300,000 barrel decline forecast in the Reuters poll. Supplies have shrunk 22 million barrels since the week to Feb. 2.
Production of the motor fuel fell 155,000 bpd to 8.773 million bpd while imports fell 125,000 bpd to 1.0 million bpd.
Gasoline demand rose 241,000 bpd to 9.49 million bpd.
Distillate stocks were unchanged at 118 million barrels against the average forecast for a 600,000-barrel drawdown.
Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah told reporters that tension between the West and Iran over Tehran's nuclear ambitions was a big factor in the recent price rise, and that the price would fall if tension eased.