OIL PRICES: $49
WSJ wrote, crude-oil prices ticker higher Wednesday after government data showed falling stockpiles at a time when many traders have feared a glut.
The U.S. Energy Information Administration said Wednesday that crude stockpiles fell by 2.5 million barrels in the week ended Friday. Analysts surveyed by The Wall Street Journal had expected a 500,000-barrel addition. Gasoline stockpiles fell by 2.7 million barrels. That helped the oil markets recover from losses tied to estimates from the American Petroleum Institute, an industry group, showing gasoline stockpiles rose by 2.2 million barrels.
The data came just two weeks after oil dipped below $40 a barrel and into a bear market, in part from fears of fuel stockpiles nearing record highs world-wide. There are still concerns about that, because distillates stockpiles rose, oil production increased, and total stockpiles of crude and all oil-based products did, too.
"These inventory numbers on gasoline might go quite a ways to alleviate those fears" of a glut, said Bart Melek, head of commodity strategy at TD Securities in Toronto. "But one week's data does not a trend make."
Light, sweet crude for September delivery settled up 21 cents, or 0.5%, to $46.79 a barrel on the New York Mercantile Exchange. Gasoline futures settled up 2.79 cents, or 2%, at $1.4505 a gallon. Diesel futures gained 2.79 cents, or 1.9%, to $1.4892 a gallon.
Diesel had been higher even before the report and held those gains despite an increase in stockpiles. That might be a sign that flooding in Louisiana is playing more of a role in the market, said Donald Morton, senior vice president at Herbert J. Sims & Co., who runs an energy-trading desk. If that flooding closes or slows refineries, it could shorten the product supply, which would be bullish for those prices, while slowing refiners' crude buying, which is bearish for oil.
Mr. Morton said the EIA report on the whole isn't bullish. The gasoline draw is only in line with seasonal averages and the risk of storage filling to capacity is still there for the East Coast. Total commercial stockpiles of crude and all oil-based products rose for the seventh straight week to 1.4 billion barrels, a record in EIA data going back through 1990.
"That's a lot of juice. And where are you going to hide it all?" Mr. Morton said.
Oil recently has been moving upward from that dip below $40 a barrel after talk of plans for an informal meeting of the Organization of the Petroleum Exporting Countries in September. Leaders of both Saudi Arabia and Russia have expressed interest in revisiting a deal to limit production.
But the group failed to finalize a deal after similar talk in the late winter and early spring. And analysts say it is unlikely Iran would be willing to cap its production while it continues to restore output to pre-sanction levels.
On Tuesday, an Iranian press official said the country probably wouldn't be pumping at the pre-sanction level—between 4 million and 4.2 million barrels a day—by the time the talks takes place from Sept. 26 to 28 and a decision hadn't been taken about attending the meeting.
Iran's apparent reservation prompted other OPEC members to be more apprehensive with some saying there would be no pact without Iran's pledge—a longstanding condition set by Saudi Arabia and its Arab neighbors.
Countries such as Libya and Nigeria, whose crude production and exports were stunted by internal strife and militant attacks in the past few months, could also either ask for a special postponement or the right to freeze their output at the level of their maximum production potentials, said a Geneva-based oil trader.
"There remains little reason to believe next month's informal meeting will result in any significant shifts to global oil supply," Robbie Fraser, commodity analyst at consultant Schneider Electric SA in Louisville, Ky., said in a note.
Still, expectations that major producers could unveil some measures to accelerate the rebalance has pushed some traders out of bearish bets, nudging Brent prices closer to the $50 mark, analysts had said.
"Fifty dollars at the moment is not a game changer because of the huge inventories," said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia. "But [an] expected demand rise in the second part of [the] year might drive prices up later."
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