Gasoline Futures Rise; Natural Gas Slides
The energy crisis is trying to make a comeback in the oil market, while in the natural gas market the crisis lately is for producers rather than consumers.
Crude oil and gasoline prices in futures markets rose again Tuesday as a weekly industry survey showed a hefty drop in U.S. gasoline inventories.
But natural gas futures slid to 19-month lows on expectations that supplies will continue to rise.
Oil traders were cheered by the weekly American Petroleum Institute survey, which showed a 6.8-million-barrel drop in U.S. gasoline inventories last week, to 196.3 million barrels.
It was the seventh straight weekly fall in inventories, as strong demand in the summer driving season has drawn down supplies.
In New York trading before the API survey data were released, near-term unleaded gasoline futures rose 0.69 cent to 84.51 cents a gallon, the highest since mid-June. The price rose to 85.75 cents in after-hours trading, after the report.
Crude oil futures rose 50 cents to $27.17 a barrel in regular New York trading, then edged up 5 cents in after-hours activity. Crude prices have been stuck between $26 and $28 a barrel in recent weeks.
The bullish effect of the gasoline inventory figures was tempered by a 2-million-barrel increase in crude oil inventories last week, to 304 million barrels. Crude supplies have been pumped up by a rebound in crude imports as Iraqi cargoes have returned to U.S. shores in force.
Gasoline prices at the pump have begun to rebound over the last two weeks, reacting in part to rising prices in the futures markets.
Pump prices have soared in the Midwest in particular, after Citgo’s Lemont, Ill., refinery caught fire and was shut down.
The U.S. Environmental Protection Agency said Tuesday that it temporarily will relax anti-pollution rules to supply the Chicago and Milwaukee areas with more gasoline in an effort to curb a fuel price spike in the cities.
Pump prices in Southern California also have been boosted in part by refinery problems.
Some analysts say rising crude oil inventories could mean a rebound in gasoline inventories soon as well, once the summer driving season ends.
U.S. crude imports have swelled by 900,000 barrels per day, to 9.5 million per day, as Iraqi oil-for-food exports--stopped for a month mid-year in a dispute with the United Nations--have restarted.
“The question is: Are we burning that crude as fast as they send it to us or is it going to create a glut?” said Phil Flynn, analyst at Alaron Research in Chicago.
Meanwhile, in the natural gas market the news remains good for consumers and bad for producers.
Near-term natural gas futures fell 5% Tuesday to a 19-month low on expectations that U.S. inventories will keep swelling.
Cooler weather in much of the country has reduced air-conditioning demand and slowed gas purchases by power plants.
Distributors probably pumped an above-average amount of gas into storage last week, bolstering inventories that have been rising at a record pace since late March, analysts said.
Natural gas futures for September dropped 12.9 cents Tuesday to $2.42 per million British thermal units in New York. That was the lowest closing price since Jan. 18, 2000.
Gas may fall as low as $2.10 per million BTU in the next two weeks, said Marshall Steeves, an energy analyst at Refco Inc. in New York.
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Bloomberg News was used in compiling this report.
