Oil Down On Speculation of Plentiful Supplies
NEW YORK (AP) _ Oil prices fell Tuesday, just before the industry reported that the U.S. supply of gasoline had risen above the so-called minimum operating level for the first time in five weeks.
Traders had speculated - correctly - that once the market was closed, the American Petroleum Institute would report that the stockpile of crude oil and refined petroleum products had increased last week. Most energy futures were sold off.
Unleaded gasoline for delivery in June took the biggest hit, falling 1.34 cents to settle at 69.99 cents a gallon at the New York Mercantile Exchange.
Light sweet crude oil for delivery in June settled at $20.74 per barrel, down 17 cents. Home heating oil finished mostly lower, although contracts for delivery in June settled at 54.75 cents a gallon, up .22 cent.
Natural gas prices were mixed, with contracts for delivery in June settling at $1.349 per 1,000 cubic feet, unchanged from Monday.
The API report for the week ending Friday showed gasoline stocks climbing out of what the government considers to be the minimum operating level of 205 million barrels. The nation had 206.2 million barrels of gasoline, up from 204.3 million a week earlier but down from 215.0 million a year earlier, the industry group said.
For weeks, the market has warily watched gasoline supplies, which had shrunk to their lowest level since the mid 1970s, raising the prospect of shortages and higher prices.
But no shortages developed at the pumps, and some analysts had said the dwindling supply did not pose any problems because the recession had weakened demand for fuel.
During Tuesday’s trading, the market had correctly anticipated higher supplies in the API report, said Randall Rothenberg, an oil trader with Dean Witter Reynolds Inc.
In addition, traders were selling oil in response to reports that the British production of oil from the Brent field in the North Sea during June would be twice as high as shipments for May.
″That was bearish for crude,″ said Rita Beale, an analyst at Shearson Lehman Brothers Inc. The near-term expectations of the traders has created an unusual situation in which some of the crude contracts for delivery in later months were at a slightly higher value than the crude to be delivered in June, she said.
The API report also indicated that crude oil inventories and the supply of distillates, which include home heating oil, were higher last week.
The crude stockpile was at 338.7 million barrels, up from 338.6 million a week earlier but down from 376.2 million a year earlier. The distillate stockpile was at 101.7 million barrels, up from 101.3 million a week earlier and 96.8 million a year earlier.
The nation’s refineries were running at 87 percent of capacity, up from 86.1 percent a week earlier and 84.2 percent a year earlier.
In London, North Sea Brent Blend crude oil for delivery in June settled at $19.06 per barrel, down 23 cents, at the International Petroleum Exchange.