API Numbers...............looking good
API Gasoline Supplies Fall: Economic Instant Insight
Market Reaction
Moderate. The drop in gasoline inventories last week reported after trading by the American Petroleum Institute was more than twice the size expected by analysts, as demand soared to a record level.
U.S. crude oil inventories rose a less-than-expected 823,000 barrels, or 0.2 percent, as refinery operation slowed by almost 2 percentage points, according to API data.
The report, issued after the end of floor trading on the New York Mercantile Exchange, also showed that distillate inventories, which include heating oil, fell more than expected during the week ended March 19.
Crude oil for May delivery recently was up 14 cents at $15.65 a barrel in Access electronic trading on the Nymex that resumed at 7:25 p.m. after being halted for 2 1/2 hours because of technical problems.
There were no trades made for April gasoline, which ended floor trading at 48.91 cents a gallon, down 0.51 cent, the exchange said, though there was a recorded bid of 49.50 cents and an ask of 49.55 cents. May gasoline recently was up 0.79 cent at 50.35 cents in Access trading.
Behind the Numbers
Gasoline inventories fell by 4.79 million barrels, or 2.1 percent, to 221.4 million barrels, the API said. Analysts surveyed by Bloomberg News before the report predicted declines ranging, on average, from 1.5 million barrels to 1.9 million barrels.
Implied demand, as calculated from other figures in the API report, surged to a record 9.6 million barrels a day.
Refinery operations slowed by 1.8 percentage points to 91.5 percent of normal rated capacity amid outages and maintenance, the API report showed. Analysts had expected utilization to be little changed. Utilization has fallen by 7.5 percentage points since the week ended Jan. 1.
Crude oil stocks east of the Rocky Mountains rose by almost 2.2 million barrels, offset by a decrease of 1.3 million barrels on the West Coast, a region that is often discounted by traders because it's not connected to the rest of the nation by pipeline.
The rise in crude oil inventories was less than analysts' expectations for a gain of 1.1 million barrels to 1.7 million barrels. Seven of the 10 analysts surveyed expected a rise.
The supply gain comes even as domestic crude production is running at its lowest level in 49 years. The report showed implied demand for crude by refiners last week rose by 1.4 million barrels a day, while imports rose by 858,000 barrels a day.
Distillate supplies, which include heating oil, fell by 4.69 million barrels, or 3.5 percent, to 130.7 million barrels. Analysts had predicted a drop of between 1.3 million barrels and 1.8 million barrels. Supplies normally fall at this time of year.
Within the distillate fuel category, home heating oil supplies fell by 3.56 million barrels, while inventories of diesel, which has a lower sulfur content, fell by 1.13 million barrels.
What Experts Say
''It's bullish across the board,'' said Bill O'Grady, vice president and director of fundamental futures research, at A.G. Edwards & Sons in St. Louis. ''The product draws were a little bigger than I expected, but this time of year, we should be seeing declines, so it's not a huge shock.
''I'm not sure how much longer heating oil can go up in price, because this week will be the last really good number we're going to get for that (this year). I know you've all had some weather lately, but that string is about to run out.'' Market Trend
Crude oil fell 32 percent in 1998, touching a 12-year low of $10.35 a barrel in December, as 2.6 million barrels per day in output cuts from major producers failed to eliminate a worldwide glut.
Crude oil rose to a five-month high this week before the Organization of Petroleum Exporting Countries approved an agreement to cut output by 2.1 million barrels a day. Skepticism about the cuts exists because OPEC members last month met only about 80 percent of the oil output cuts they pledged last year, mostly because Iran disputed its target.
Oil prices are also rising on optimism that gasoline demand will increase in the weeks ahead as the summer driving season begins and that existing output cuts are beginning to reduce world inventories.
20:29:25 03/23/1999
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