Surprise Inventory Decline
Sends Crude Prices Higher
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
NEW YORK -- Crude-oil prices rose Wednesday after data showed U.S. inventories fell unexpectedly last week, as imports dropped by more than 1 million barrels a day and refiners stepped up production.
Crude-oil futures for April rose $1 to $37.72 a barrel in afternoon trading on the New York Mercantile Exchange. April heating oil futures gained 1.18 cents to $1.042 a gallon. April gasoline rose 1.83 cents to $1.117 a gallon, and April natural gas fell 6.4 cents to $5.88 per million British thermal units.
The U.S. Department of Energy said imports fell by 1.058 million barrels to 7.621 million barrels a day and refinery utilization jumped by 2.5 percentage points to 90.3% of operating capacity.
A majority of analysts surveyed by Dow Jones Newswires had projected an average build of 2.14 million barrels in crude stocks.
Meanwhile, the American Petroleum Institute, a trade group, largely confirmed the DOE data, reporting a decline of 1.736 million barrels in crude stocks amid a decline in imports.
"It's the exact opposite of what most of us were looking for," said Peter Beutel, an analyst at Cameron Hanover. "Traders were hoping to see a move towards 275 million barrels or 276 million barrels. Instead, we've seen a move back below 270 million barrels."
The decline came despite indications of a sharp increase in output by the Organization of Petroleum Exporting Countries. In particular, analysts' indications of a rise in Saudi and Venezuelan output had led most industry analysts to predict a build in U.S. crude stocks.
But while imports of Venezuelan oil continued to rise last week, overall imports slumped, the DOE said in a note accompanying the data. According to the DOE, crude imports are about 3.5% below year-ago levels.
"We keep seeing signs that production abroad is increasing, but we're still not seeing that extra crude coming on shore yet," Mr. Beutel said.
With a potential war in Iraq creeping closer, the low level of imports could mean trouble for refiners as they step up production for the summer driving season, analysts said.
"It just highlights just how sensitive this market is to the potential shocks of any disruption in supplies," Mr. Beutel said.
Historically low inventories coupled with the threat of war in oil-rich Iraq have lifted Nymex crude oil futures to near their highest level since the last Gulf War.
In other commodity markets:
GRAINS: Wheat for May delivery fell 5.50 cents to $2.98 a bushel and May corn fell 0.25 cent to $2.35 a bushel. May oats fell 3 cents to $1.82 a bushel, while May soybeans fell 4.50 cents to $5.67 a bushel.
METALS: April gold fell $3.70 to $346.90 a troy ounce on the Comex division of the New York Mercantile Exchange. May silver lost 4.5 cents to $4.645 an ounce, and June palladium fell $3.00 to $240.50 an ounce. April platinum lost 30 cents to $695.
Updated March 12, 2003 2:29 p.m. EST
Sends Crude Prices Higher
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
NEW YORK -- Crude-oil prices rose Wednesday after data showed U.S. inventories fell unexpectedly last week, as imports dropped by more than 1 million barrels a day and refiners stepped up production.
Crude-oil futures for April rose $1 to $37.72 a barrel in afternoon trading on the New York Mercantile Exchange. April heating oil futures gained 1.18 cents to $1.042 a gallon. April gasoline rose 1.83 cents to $1.117 a gallon, and April natural gas fell 6.4 cents to $5.88 per million British thermal units.
The U.S. Department of Energy said imports fell by 1.058 million barrels to 7.621 million barrels a day and refinery utilization jumped by 2.5 percentage points to 90.3% of operating capacity.
A majority of analysts surveyed by Dow Jones Newswires had projected an average build of 2.14 million barrels in crude stocks.
Meanwhile, the American Petroleum Institute, a trade group, largely confirmed the DOE data, reporting a decline of 1.736 million barrels in crude stocks amid a decline in imports.
"It's the exact opposite of what most of us were looking for," said Peter Beutel, an analyst at Cameron Hanover. "Traders were hoping to see a move towards 275 million barrels or 276 million barrels. Instead, we've seen a move back below 270 million barrels."
The decline came despite indications of a sharp increase in output by the Organization of Petroleum Exporting Countries. In particular, analysts' indications of a rise in Saudi and Venezuelan output had led most industry analysts to predict a build in U.S. crude stocks.
But while imports of Venezuelan oil continued to rise last week, overall imports slumped, the DOE said in a note accompanying the data. According to the DOE, crude imports are about 3.5% below year-ago levels.
"We keep seeing signs that production abroad is increasing, but we're still not seeing that extra crude coming on shore yet," Mr. Beutel said.
With a potential war in Iraq creeping closer, the low level of imports could mean trouble for refiners as they step up production for the summer driving season, analysts said.
"It just highlights just how sensitive this market is to the potential shocks of any disruption in supplies," Mr. Beutel said.
Historically low inventories coupled with the threat of war in oil-rich Iraq have lifted Nymex crude oil futures to near their highest level since the last Gulf War.
In other commodity markets:
GRAINS: Wheat for May delivery fell 5.50 cents to $2.98 a bushel and May corn fell 0.25 cent to $2.35 a bushel. May oats fell 3 cents to $1.82 a bushel, while May soybeans fell 4.50 cents to $5.67 a bushel.
METALS: April gold fell $3.70 to $346.90 a troy ounce on the Comex division of the New York Mercantile Exchange. May silver lost 4.5 cents to $4.645 an ounce, and June palladium fell $3.00 to $240.50 an ounce. April platinum lost 30 cents to $695.
Updated March 12, 2003 2:29 p.m. EST
