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To: pallmer who wrote (9741)	1/22/2004 3:36:38 PM
From: pallmer	Read Replies (1) \| Respond to of 29602

22 Jan 2004 15:33 ET =DJ Nymex/IPE Close:Gasoline Buys Turn Crude Losses To Gains By Terin Miller Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Crude oil futures settled 1% higher Thursday in New York after a bearish reading of weekly petroleum inventory and natural gas storage data gave way to renewed buying based on tight U.S. crude oil and gasoline stocks. Gasoline futures led the rise late in the day, with traders saying a large refiner, finding itself in need of supply, bought February futures. With cash prices in New York Harbor and in the Gulf Coast trading at a premium to the futures price, buying in the February futures contract, set to expire at the end of trading next Friday, became more attractive, the traders said. "The problem of changing quality specs makes old inventory useless for the new market, except for blending," said Ed Silliere, a trader with Energy Merchant Corp. in New York. Energy Merchant supplies gasoline, heating oil and diesel fuel throughout the East Coast to independent distributors. "So what's available to use right now is not what we see in inventory. It's some smaller number." In its weekly U.S. petroleum inventory report, the U.S. Department of Energy's statistical arm - the Energy Information Administration - said gasoline stocks grew by 1.1 million barrels to 209.5 million barrels. That level is still 600,000 barrels, or 0.3%, below the five-year average of 210.1 million barrels for this time of year. But the EIA also said gasoline demand fell 1.4% in the last four weeks from the level in the same period last year. The inventory report initially caused selling in gasoline as well as crude and heating oil futures. Light, sweet March crude oil futures settled 35 cents higher at $34.93 a barrel after touching a high of $35.00. The contract hit a low of $33.75 a barrel after release of the EIA data. On London's International Petroleum Exchange, March Brent blend crude oil futures settled 25 cents higher at $31.11 a barrel after touching a high of $31.15. (MORE) Dow Jones Newswires January 22, 2004 15:33 ET (20:33 GMT) 22 Jan 2004 15:33 ET =DJ Nymex/IPE Close -2:MTBE Bans Seen Affecting Gasoline Mkt New York and Connecticut banned the use of methyl tertiary butyl ether as an oxygenate, or clean-air additive, in gasoline effective Jan. 1. The use of other oxygenates, such as ethanol, requires blending at a delivery point rather than at the refinery, effectively changing the product requirements of refiners. As the winter heating season wanes and refiners start to focus more on production of gasoline for the summer driving season, more attention will be paid to gasoline requirements, analysts said. Phil Flynn, an analyst who trades with Alaron Trading Corp. in Chicago, said he thought the EIA data Thursday was "fairly neutral." "The reason the market dipped so much was because the natural gas number was bearish, and that weighed everything down," Flynn said. Natural gas futures fell as much as 55 cents to a low of $5.60 per million British thermal units Thursday following an EIA weekly storage report showing a draw in natural gas that was well below consensus estimates for a week of below-normal temperatures. The EIA said 156 billion cubic feet of gas was drawn from storage - 17% below the consensus forecast of 188 Bcf. Natural gas and the petroleum markets trade on somewhat different fundamentals, but movements in one market can affect the other, as some users have the ability to move between natural gas and heating oil. Traders said funds began selling the natural gas futures on the data, then moved in to sell heating oil and eventually all petroleum-market related futures. But the buying in gasoline futures seemed to stem the tide. Underpinning current crude oil prices, however, is the fact U.S. crude oil stocks remain below the National Petroleum Council's "lower operational inventory" mark of 270 million barrels. Bill O'Grady, an analyst with A.G. Edwards in St. Louis, Mo., said he thinks traders used the data as an excuse to sell amid the growing perception that the Organization of Petroleum Exporting Countries may not further cut its output ceiling by the second quarter of the year. February heating oil futures settled 91 points higher at $1.0384 a gallon after touching a high of $1.0420. The contract hit a session low of 98.80 cents a gallon after release of the EIA data, which showed a lower-than-expected draw of 2.8 million barrels in distillate fuels stocks in the week ended Jan. 16. Distillate fuels include home heating oil and diesel. On London's IPE, February gasoil futures settled $8.00 lower at $276.50 a metric ton after touching a low of $275.00. February gasoline futures settled 3.50 cents higher at $1.0547 a gallon after touching a high of $1.0600. The contract hit a session low of 99.50 cents after release of the EIA data. (MORE) Dow Jones Newswires January 22, 2004 15:33 ET (20:33 GMT)