Market Reaction Limited. U.S. crude oil inventories fell unexpectedly last week, a report from the American Petroleum Institute showed. The 1.47 million-barrel, or 0.4 percent, decline came even as imports surged 14 percent.
The report, issued after the end of floor trading of oil futures, also showed increases in inventories of both gasoline and distillate fuels. Crude oil for July delivery was little changed at $16.57 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange after the report was issued. Gasoline and heating oil futures also were little changed.
Behind the Numbers Crude oil inventories fell to 330.9 million barrels during the week ended May 28, the API said, as refinery operations were unchanged from a week earlier at 96.7 percent of capacity. The API revised the inventory figure for the previous week, raising it by 339,000 barrels. Nine analysts surveyed by Bloomberg News had expected gains ranging, on average, from 300,000 barrels and 1.3 million barrels. Five analysts expected a gain and two a decline. The drop in crude supplies came as imports rose by 1.10 million barrels a day to 8.86 million barrels a day. Gasoline inventories rose 2.32 million barrels to 222.3 million barrels, the API said. Analysts were divided on whether gasoline supplies rose or fell, with forecasts ranging from a decline of 600,000 barrels to an increase of 200,000 barrels.
Gasoline imports rose by 145,000 barrels a day to 369,000 barrels a day. Implied demand for gasoline, derived from figures in the API report, was little changed at 8.73 million barrels a day, an increase of 116,000 barrels a day. Distillate fuel inventories rose 1.94 million barrels to 132.6 million barrels. Analysts expected gains ranging, on average, from 1.1 million barrels to 1.6 million barrels. Within the distillate fuel category, heating oil supplies rose by 1.07 million barrels, while diesel supplies rose by 869,000 barrels.
What Experts Say ``The crude draw was surprising, but the gasoline number was a disappointment for those expecting a bullish report,'' said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. in New York. The unchanged refinery utilization figure was ``OK, but it's going to come down, as more and more refiners cut back. That means there will be less of everything down the road, and that's good for the complex. All in all, it's moderately bullish, given the crude number.''
Market Trend Crude oil prices fell 32 percent in 1998, touching a 12-year low of $10.35 a barrel in December, as output cuts pledged by major producers failed to eliminate a worldwide glut. Prices rebounded this year, reaching a 17-month high of $19.05 on May 5 following more supply cuts from the Organization of Petroleum Exporting Countries and other producers. Prices could recover on signs that Asia is slowly recovering from more than a year of weak oil consumption and that OPEC is sticking to its promise to reduce output. OPEC made 91 percent of its pledged cuts during May, according to a Bloomberg survey of traders and analysts.