Oil Finishes May With a Rise to $64 After Dip in Crude Inventories
Oil rose Thursday, recovering from early losses to close above $64 a barrel as U.S. government data showed crude oil inventories fell unexpectedly last week.
Weekly U.S. government oil inventory data showed crude oil stocks dropped 2.0 million barrels last week as imports fell by over 800,000 barrels per day.
U.S. crude settled up 52 cents or 0.8% at $64.01 a barrel after falling as low as $62.43. London Brent crude oil settled up 20 cents at $68.04 a barrel, off a session low of $66.80.
The expiring June U.S. gasoline futures settled down 2.13 cents or 0.9% at $2.2512 a gallon, however, as the government report showed gasoline stocks had risen for a fourth week in a row despite strong demand. During the month of May, gasoline futures fell 18.93 cents or 7.8%, the largest monthly decline since last September.
Although gasoline stockpiles remain below their normal range for this time of year, the steady increases in gasoline stocks in the United States has taken some steam out of the rally that pushed oil prices up to nine-month highs of $71.80 on May 24 following a string of unplanned refinery shutdowns that sent U.S. gasoline stocks tumbling.
U.S. gasoline stocks rose 1.3 million barrels last week ahead of the Memorial Day holiday that traditionally marks the beginning of the summer driving season.
Imports of gasoline reached 1.61 million barrels a day, the third highest tally on record as U.S. refineries kept struggling with operational problems, leaving utilization unchanged at 91.1%, below normal.
"Higher prices are generating a lot of products imports from overseas," said Christopher Jarvis of Caprock Risk Management in New Hampshire.
"Refinery utilization held steady last week but at least we are not going backwards."
High gasoline prices have done little to halt demand growth in the United States, however. Gasoline shipments to retailers over the last four weeks are up 1.4% from last year.
Problems in Nigeria, a major supplier of high-quality crude oil that is easy to make into gasoline, continued to underpin oil prices. Attacks on oil installations have continued into the first days of new president Umaru Yar'Adua's tenure which began on Tuesday.
A protest by villagers at the Bomu pipeline hub entered its third day on Thursday, cutting 150,000 barrels per day of Bonny Light crude production in Nigeria.
An unrelated pipeline leak in nearby Nembe cut another 77,000 bpd, bringing the total amount of Nigerian output lost to 922,000 bpd.
Adding to supply risks, June marks the start of the Atlantic hurricane season that poses a threat to Gulf of Mexico oil production and refining operations. The U.S. government's top climate agency expects up to 10 Atlantic basin hurricanes, of which three to five could be major storms.