Carrera Elite
Libra
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Glendale,AZ
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1990 Carrera 23.5 Classic
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Posted: Jan. 24 2007,1:48 pm |
Post # 25 |
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NEW YORK (AP) - Oil prices rose Wednesday as traders shrugged off news that oil inventories grew last week and worries resurfaced that cold weather and reduced OPEC production could drain supplies.
The market initially sold off more than US$1 on the U.S. government report that stocks of crude, gasoline and distillates rose last week. Prices later rebounded back above $55 a barrel, extending Tuesday's increase of more than $2 a barrel, which was sparked by U.S. President George W. Bush's announcement to increase the U.S. emergency oil stockpile.
The rally was due to several factors: signs that OPEC producers are complying with their announced cuts, forecasts of snow storms in the Midwest and Northeast, and the growing belief that the recent downtrend, which brought crude prices down as much as 18 per cent this year to $50 a barrel last week, is over.
"You're seeing the psychology of the market," said Alaron Trading Corp. analyst Phil Flynn, noting that Bush's announcement to add to the Strategic Petroleum Reserve this spring by 100,000 barrels per day shouldn't have been enough to drive up crude prices by more than $2 a barrel on Tuesday.
"We spill that much every day. It's not going to make that much of a difference," Flynn said. Instead, the return of cold weather to the northern United States has rekindled expectations of climbing consumer demand, which should rise further when the spring driving season begins.
"To call off winter on Jan. 1 may have been a bit premature," Flynn said.
On Wednesday, light sweet crude for March delivery rose 25 cents to $55.32 in late trading on the New York Mercantile Exchange, after dropping as low as $53.66 after the inventory report was released.
The reversal was helped in part by ConocoPhillips' chief executive, who said that the company was firmly instructed to curb output in its Libya and Venezuela operations. The comments led some traders to abandon their skepticism that the Organization of Petroleum Exporting Countries wouldn't enforce production cuts announced late last year.
Still, supplies are at or above the average level for this time of year, the EIA said in its weekly report Wednesday. U.S. crude inventories rose 700,000 barrels to 322.2 million barrels last week - building on the previous week's increase, which was the biggest in more than four years.
Gasoline inventories rose four million barrels to 220.8 million barrels. Distillate fuels, which include heating oil and diesel, rose 700,000 barrels to 142.6 million barrels. Heating oil inventories slipped, but a huge rise in diesel fuel more than offset the loss.
Nymex heating oil futures rose less than a cent to $1.5825 a gallon, and gasoline futures rose more than a cent to $1.4610.
Natural gas futures fell 19.7 cents to $7.40 per 1,000 cubic feet.
March Brent crude on London's ICE Futures exchange rose 38 cents to $55.48 a barrel.
On Tuesday, the Nymex crude contract had climbed $2.48, or 4.7 per cent, to settle at $55.04 - its biggest jump since September 2005, when the Gulfof Mexico coast was reeling from hurricane Katrina and watching the next storm, Rita, approach its refineries.
The jump was sparked by the Department of Energy's plans to increase the capacity of the Strategic Petroleum Reserve to 1.5 billion barrels from 691 million barrels. But in terms of pure supply and demand, the announcement shouldn't have affected markets as much as it did, analysts said.
"Fundamentally, nothing really changed: the announcement yesterday won't change the ability to get crude oil, and it won't change the fact that there's a surplus around the world," said James Cordier, president of Liberty Trading Group in Tampa, Fla.
Growing oil inventories and unusually warm weather in the United States dragged crude prices below $50 a barrel last week for the first time since May 2005, but the return of cold weather has given prices a lift.
There's little chance energy prices will drop below $50 a barrel again anytime soon, Cordier said.
"I think we'll consolidate in these low 50s. I think that's the fair value of crude right now," Cordier said, adding that the spring driving season could bump up prices back toward the $60-a-barrel level.
The average U.S. retail price of a gallon of regular gasoline has dropped from about $2.33 on Jan. 1 to $2.147 on Wednesday, according to AAA.
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