Energy : Price of Crude Seesaws; Stockpiling Reported
Crude oil prices, driven primarily by a large increase in gasoline inventories and a bout of profit taking, plummeted nearly $1 a barrel Wednesday before recouping most of the loss and closing above $33.
The price of a barrel of Texas Intermediate, the U.S. benchmark crude, closed down 23 cents at $33.18 on the New York Mercantile Exchange. October unleaded gasoline--which at one point had fallen 3.61 cents a gallon--ended the day down 1.71 cents at 89.90 cents a gallon. October heating oil rebounded from earlier losses and ended the day up 2.10 cents to 88.53 cents a gallon.
Meanwhile, the American Petroleum Institute reported Wednesday that wholesalers and consumers apparently are stockpiling petroleum products, especially jet and industrial fuels.
The API said the stockpiling appeared to date from the increase in oil prices that began in late June rather than the Iraqi invasion of Kuwait on Aug. 2. “If you’re a buyer and you anticipate a rise in prices, you’ve got a certain incentive to buy now rather than later,” said an API executive quoted by United Press International.
At the start of Wednesday’s trading, prices plunged primarily on industry statistics that showed U.S. inventories of gasoline last week climbed 5.9 million barrels from the previous week to 217 million barrels. Before the jump, industry observers were concerned that gasoline stocks were close to the 205 million barrels considered the minimum needed to keep the system running without interruption.
Although gasoline stockpiles rose, demand fell 8% last week to 6.8 million barrels with the end of the peak summer travel season, when gasoline consumption is highest.
“We’re coming off the driving season, and there is generally a large increase (in inventories) following the Labor Day weekend,” said Scott T. Jones, president of AUS Consultants in Philadelphia. Meanwhile, “the refineries in this country are still running flat out producing gasoline,” leading to higher inventories.
API figures also showed that daily oil imports fell to 6 million barrels last week from 6.9 million, as the worldwide embargo against Iraqi and Kuwaiti crude began to make itself felt. As a result, U.S. commercial stockpiles of crude oil fell 4.5 million barrels last week to 369.8 million.
A round of profit taking that began on European energy markets took hold in the United States and contributed to the early morning selloff on the New York Mercantile Exchange.
“It’s a reflection that buying pressure has been quite substantial,” said Kevin Kelly, manager of futures trading for Chevron Corp.’s international oil company. “You can look at (the selloff) like a lot of people trying to get out the door at once.”
Despite falling prices, the market remains bullish, industry observers said. Trading in October crude oil ends today, and the market had already shifted its attention to oil to be delivered in November, traders say. November crude rose 30 cents to $32.97 a barrel Wednesday,
“You still have the tensions; you still have the large drawdowns of crude,” said Tom Bentz, director of trading for United Energy, a New York futures trading firm.
