Wednesday, Feb 08, 2012

--Nymex crude touches $100/bbl ahead of DOE report

--Analysts expect build in crude stockpiles, but API report shows unexpected drop

--Brent-WTI spread continues to narrow 


 
   By Dan Strumpf 
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Benchmark U.S. crude-oil futures touched $100 a barrel Wednesday ahead of a closely watched report on oil inventories.

The Department of Energy's weekly inventory survey is due at 10:30 a.m. EST. Analysts surveyed earlier in the week widely expected a sharp build in crude-oil inventories amid weak demand for oil and refined fuels in the U.S. But a report from the American Petroleum Institute released late Tuesday upset those expectations, saying inventories fell last week.

"If we get a similar draw in the crude today and nothing crazy with [refined] products, I think the market has potential to go back over $100," said Ray Carbone, president of energy options brokerage Paramount Options.

Light, sweet crude oil futures for March delivery recently rose $1.43, or 1.5%, to $99.84 a barrel on the New York Mercantile Exchange. The contract rose as high as $100.05 a barrel earlier in the session.

Brent crude on the ICE futures exchange, the European benchmark, was more restrained, rising just 30 cents, or 0.2%, to $116.53 a barrel.

The API, an industry group, said crude stocks fell 4.5 million barrels last week, while gasoline stocks rose 4.4 million barrels and distillate stocks rose 386,000 barrels.

Market participants are awaiting confirmation of the figures in the DOE's more closely watched survey. Analysts surveyed this week by Dow Jones Newswires called for an oil-inventory build of 2.7 million barrels. Gasoline stocks were seen rising 100,000 barrels, while stocks of distillates, a category including heating oil and diesel, were expected to fall 900,000 barrels.

The rally in Nymex crude bucks a recent trading pattern that saw Brent crude enjoying a steep rally and the Nymex contract--called West Texas Intermediate, or WTI--holding steady. Brent has been supported by the recent European Union oil sanctions on Iran, which has sent traders in Europe scrambling to find alternative supplies.

The sanctions are aimed at pressuring Tehran over its nuclear program, which the U.S. and its allies believe is aimed at developing nuclear weapons--a charge Iran denies.

Meanwhile, WTI has held steady recently due to weak oil demand in the U.S. and the prospect of rising inventories at the Nymex delivery point of Cushing, Okla. Last week, the DOE reported a steep increase in Cushing inventories.

Those forces sent the gap between Brent and WTI to more than $20 a barrel in intraday trading Tuesday, its widest since October.

The gap reversed course mid-day after Goldman Sachs, often a major force in oil trading, recommended closing March Brent-WTI positions--where Brent was bought and WTI was sold--and taking profits on the price spread between the two. The recommendation jolted traders, who quickly closed out surging Brent positions.

Front-month March reformulated gasoline blendstock, or RBOB, recently rose 0.95 cent, or 0.3%, to $2.9370 a gallon. March heating oil futures fell 0.35 cent, or 0.1%, to $3.1874 a gallon.

-By Dan Strumpf, Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com.

(END) Dow Jones Newswires

February 08, 2012 09:49 ET (14:49 GMT)