Gasoline Jumps 3% on Tight U.S. Supplies; Oil Gains 2%
Oil rose more than a dollar on Wednesday after U.S. gasoline stocks fell for an 11th straight week, tightening supplies ahead of peak summer demand in the world's top consumer.
Weekly U.S. government data showed gasoline stocks fell 2.8 million barrels -- much more than an anticipated drop of 400,000 barrels and bringing the decline since early February to nearly 15%.
June crude on the New York Mercantile Exchange settled up $1.26 or 2% to $65.84.
"It is clearly bullish for the gasoline market," said Tim Evans of Citigroup. "These are the lowest levels since October 2005 ... This is a very tight gasoline market."
May RBOB gasoline shot up 7.37 cents or 3.3% to $2.2826 a gallon, the highest in 8 1/2 months. The May contract has closed up six days in a row.
Analysts said the situation should improve once refineries recovered from a series of technical glitches and planned maintenance.
"Gasoline has led the market for months, but that should start to change as refiners come out of turnarounds, product balances start to loosen and crude begins to tighten," said Mike Wittner of investment bank Calyon.
He said prices had also been pushed higher by concern about instability in oil producer Nigeria, where violence has surged following weekend elections that observers say were rigged.
"Nigeria is a tough call right now," said Wittner. "The market's view was that production outages would be restored gradually after the election. But that assumption needs to be
Nigeria has lost 600,000 barrels per day (bpd) in oil production since the rebel Movement for the Emancipation of the Niger Delta (MEND) attacked oil fields in the western Delta in February 2006.
But Nigerian officials say oil fields pumping more than half that volume will be restarted by the end of May.
The dispute between the West and OPEC producer Iran over its nuclear program offered further support.
The EU and Tehran are to discuss on Wednesday whether the Islamic republic might be prepared to suspend nuclear activity after more sanctions were imposed.
Iran has vowed not to retreat despite world pressure.