Oil Climbs on Inventory Data
By Elinor Arbel
Staff Reporter
9/14/2005 11:21 AM EDT
Crude inventories plummeted and gasoline inventories unexpectedly rose last week, confounding analysts' estimates and leaving energy investors scrambling for direction.
According to the Energy Department, crude inventories fell by 6.6 million barrels last week, about three times the expected decline. Gasoline inventories, meanwhile, rose by 1.9 million barrels; they were expected to fall by 2 million. Inventories of distillate stocks fell by 1.1 million barrels.
Crude for October delivery, which was up about 80 cents prior the report, was recently adding $1.09 to $64.20 a barrel on Nymex. The contract remains down about 10% since Hurricane Katrina struck Aug. 29.
Unleaded gasoline, which has fallen 35% since Katrina, was up about a cent to $1.90 a gallon.
Wednesday's inventory results reflect a two week long process in which refineries have gradually restarted some 10% of U.S. production that was curtailed by Katrina.
"It looks like the refineries in the Gulf Coast managed to recover most of the lost production," said Jim Williams at WTRG Economics. "This is fairly encouraging."
The gain in gasoline inventories is probably attributable to skipped maintenance periods at refineries that weren't harmed by the storm, Williams said. In addition, some refined gasoline was probably released to the market after being stranded by pipeline problems, he said.
"But this week's rise in gasoline stocks doesn't mean we won't see a steep decline next week," Williams said.
Last week's report showed gasoline stocks sitting beneath the low end of their seasonal average. Many predict tight gasoline inventories will leave the U.S. little choice but to import more finished products. Before Katrina, the U.S. imported about 1 million barrels a day of gasoline.
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