3/25/98 Crude Oil, Products Climb On Nymex Despite Bearish Inventory Data
NEW YORK -(Dow Jones)- Despite bearish inventory data, crude-oil and petroleum-products futures finished solidly higher Wednesday on the New York Mercantile Exchange after more oil producers hinted they were considering production cuts in an effort to boost crude prices.
May crude oil jumped 56 cents to settle at $16.48 a barrel. June crude oil gained 53 cents to close at $16.76 a barrel.
Among oil products, April unleaded gasoline added 1.12 cents to end at 52.58 cents a gallon. April heating oil rose 1.07 cents to settle at 45.12 cents a gallon.
May natural gas gained 3.7 cents to close at $2.404 per million BTUs.
Whereas skepticism over the deal to cut overproduction reigned Tuesday, optimism returned Wednesday as Norway - the world's largest oil exporter after Saudi Arabia - and Russia suggested that they were considering production cuts. Indonesia's decision to join most of its OPEC cohorts in agreeing to make production cuts also helped the market recover. Jakarta pledged to cut 70,000 barrels a day of production. All three countries had said earlier in the week that they wouldn't participate in the Riyadh agreement to cut between 1.6 million to 2 million barrels a day of OPEC and non-OPEC production.
OPEC's decision to convene an extraordinary meeting in Vienna on Monday and reports that the cartel invited non-OPEC member to attend also were viewed as supportive, said an analyst. There was "further short covering on further jawboning by oil producers," said Tim Evans, senior energy analyst with Pegasus Econometric Group, a New-York trading firm.
The U.S. Department of Energy's weekly inventory report, released Wednesday morning, showed that crude oil stocks climbed 6.5 million barrels to 328 million barrels, a very high level compared with inventory levels over the past three years. The American Petroleum Institute's weekly report showed a near 5-million-barrel build. But traders apparently decided to focus on bullish news that the OPEC ministerial members will convene an extraordinary meeting to implement production cuts, analysts said.
Meanwhile, changes in gasoline and heating oil inventories in the latest data were too small to be considered a factor in trading, one analyst said. Gasoline stocks rose 1.1 million barrels, according to the DOE, whereas the API reported a 773,000 barrel draw in stocks. The DOE reported a 1.3 million barrel draw in distillate stocks, compared with a 2.575 million barrel draw as reported by the API.
"We paid homage to the bearish stats. But no one is willing to hammer this market ahead of a weekend OPEC meeting and the potential for more countries to agree to oil production cuts. Crude seems comfortable between $15.50 and $16.50, for now," said one trader.
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