Crude Prices Slip, Gasoline Prices Rise
NEW YORK – Crude-oil futures fell but gasoline futures rose Wednesday after the U.S. government reported an increase in crude inventories but a large decrease in gasoline inventories.
Distillate inventories, which include diesel and heating oil, also fell.
Although gasoline inventories remain in the high end of the average range for this time of year, the drop – the fourth in as many weeks- is nevertheless worrisome to traders as the United States enters the summer driving season, when gasoline demand peaks.
Light, sweet crude for May delivery slipped 22 cents to $65.85 a barrel in morning trading on the New York Mercantile Exchange. The contract had jumped $1.91 on Tuesday to settle at $66.07 a barrel.
May Brent crude on London’s ICE Futures exchange edged 2 cents higher to $64.98 a barrel.
Gasoline prices rose more than 3 cents to $1.9150 a gallon, while heating oil futures were up less than a cent at $1.8290 a gallon. Natural-gas futures fell 3.4 cents to $7.18 per 1,000 cubic feet.
U.S. crude inventories rose by 2.1 million barrels to 340.7 million barrels in the week ending March 24 from the previous week, the Department of Energy’s Energy Information Administration said Wednesday.
Gasoline inventories fell by 5.4 million barrels to 216.2 million barrels, and distillate inventories fell by 2.5 million barrels to 124.2 million barrels.
The EIA also reported motor gasoline demand averaged 9.1 million barrels a day over the last four weeks, which is 1.3 percent above year-ago levels.
Barclays Capital said the market would remain particularly sensitive to gasoline inventory levels because of concerns that changes to gasoline specifications could result in further constraints on capacity.
The gasoline additive MTBE, a groundwater pollutant, is being phased out of gasoline contract, and many worry that the fledging ethanol industry – to which the U.S. is expected to turn as an alternative – might not be ready to satisfy the expected summertime jump in demand.
Prices also continue to respond to concerns about supplies from Nigeria and the Middle East.
The outlook on Nigerian oil output remained uncertain. Royal Dutch Shell PLC, the largest foreign oil company operating in the country, has shut in nearly half of its Nigerian production and says it won’t resume operations until the country is safe enough for its workers.
Iran, the No. 2 oil producer in OPEC, also remains a potential source of concern. It has been referred to the U.N. Security Council over fears it may want to misuse its nuclear program to make weapons, but the council has been at loggerheads over U.S.-led efforts to ratchet up the pressure on Tehran.