Crude Oil Prices Head Up as Country’s Stockpile Shrinks
Oil prices surged Wednesday after U.S. crude stockpiles fell unexpectedly last week, while heating oil futures rose 6% as fear spread that the East Coast will remain starved of inventories through the winter.
On the New York Mercantile Exchange, crude oil for October delivery rose $1.18, or almost 4%, to $32.40 a barrel before falling back to close up 80 cents at $32.02. Earlier, on London’s International Petroleum Exchange, Brent crude closed at $30.80 a barrel, up 87 cents from Tuesday’s close.
U.S. crude oil inventories fell 7.8 million barrels last week--sinking again to their lowest levels in 24 years--as refinery operations increased while import levels were near unchanged, according to the American Petroleum Institute. The Energy Department reported a 4.1-million-barrel drawdown.
Brokers, traders and analysts had expected crude oil stockpiles to rise by 300,000 to 700,000 barrels because of fairly steady imports.
Crude imports, however, actually dipped slightly from the previous week, according to the data, while refinery usage of crude jumped from the previous week’s revised level, the API said.
Brokers and traders were mystified by the figures.
“These were much larger draws than anyone expected. Concerns will be rekindled,” said Thomas Blakeslee, analyst for Energy Merchant.
President Clinton reiterated Wednesday that he would like to see world petroleum prices settle into the “low-to-mid” $20-a-barrel range and said he would continue to push the Organization of Petroleum Exporting Countries to set policy that would achieve that price range.
OPEC members next meet Sept. 10, when they will consider raising production for the third time this year to push prices back toward $25 a barrel. The cartel will likely agree to an output increase if prices remain high, an OPEC source said.
“It will not be in anybody’s interest to see prices at levels beyond $30 a barrel,” the source said. “If prices continue to be high, an increase would be a must.”
Crude hit $34.37 a barrel in March, the highest level since the 1991 Persian Gulf war.
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Slick Move
Crude oil prices jumped Wednesday on news of declining U.S. inventory.
Oil futures, weekly closes and latest
Wednesday: $32.02 a barrel
Source: Bloomberg News
