Wednesday, May 7, 2014

Oil tops $100 after unexpected fall in crude supply

SAN FRANCISCO (MarketWatch) — Oil futures cleared the $100-a-barrel level on Wednesday after U.S. data showed crude inventories unexpectedly fell back from a record level.

Crude oil for June delivery (CLM4)  rose $1.24, or 1.3%, to $100.74 a barrel on the New York Mercantile Exchange. Prices haven't settled above $100 since April 29, based on the most-active contracts.

European benchmark June Brent crude (UK:LCOM4)  traded on the ICE Futures exchange also gained 41 cents, or 0.4%, to $107.47 a barrel.

/quotes/zigman/2237082/realtime CLM4 100.73, +1.23, +1.24%

Crude stockpiles fell 1.8 million barrels for the week ended May 2, according to data from the U.S. Energy Information Administration released Wednesday and a separate report from the American Petroleum Institute issued late Tuesday. Analysts polled by Platts were looking for a climb of 1.3 million barrels.

The supply decline was the first seen in several weeks, said John Macaluso, research analyst at Tyche Capital Advisors.

Commercial crude inventories stood at 397.6 million barrels in the latest week, EIA data show. For the week ended April 25, total supplies were at 399.4 million barrels, which was the largest weekly total based on EIA records going back as far as late August 1982.

Shutterstock.com Enlarge Image Crude inventories unexpectedly fell back from a record level, data show.

Stocks at the Nymex delivery hub at Cushing, Okla., fell by roughly 1.4 million barrels.

"A key takeaway from the report was the continued decline in Cushing stocks," said Tyler Richey, an analyst for the 7:00's Report, which offers daily markets commentary. "The dropping inventories at Cushing is obviously a concern because of the required minimum levels that must be maintained in the tanks before the risk of explosion greatly increases."

The EIA also said that gasoline supplies rose by 1.6 million barrels, while distillate stockpiles declined by 400,000 barrels. Gasoline stockpiles were expected to fall by 900,000 barrels, while distillates, which include heating oil, were seen up 1.5 million barrels, according to the Platts poll.

On Nymex, the June contract for gasoline (RBM4)  added less than a penny to $2.89 a gallon, while June heating oil (HOM4)  tacked on just over a cent, or 0.5%, to $2.90 a gallon.

The supply data took away some attention from developments in Ukraine, which overall on Wednesday, likely helped ease some worries about supplies from Russia, for now.

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Russian President Vladimir Putin on Wednesday said he is prepared to discuss a "way out" of the situation in Ukraine with the head of the Organization for Security and Cooperation in Europe.

But news reports said fresh fighting broke out in Ukraine as government forces pushed into the pro-Russian city of Mariupol. Ukrainian troops temporarily seized control of the city hall from pro-Russian activists but then withdrew, with pro-Russian activists then retaking control of the building, reports said.

Also on Nymex Wednesday, prices for natural gas retreated from a sizable 2.4% gain in the previous session, with the EIA on tap to report its weekly data Thursday on supplies of the fuel. June natural gas (NGM14)  fell nearly 4 cents, or 0.8%, to $4.76 per million British thermal units.

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