By William Watts, MarketWatch
Oil futures reversed early losses to trade with strong gains Thursday, waving off data that showed an unexpected rise in U.S. crude inventories as traders focused on a fall in gasoline stocks and a further decline in crude stored at the New York Mercantile Exchange’s delivery hub in Cushing, Oklahoma.
West Texas Intermediate crude for July delivery rose 90 cents,or 2.7%, to finish at $33.71 a barrel on the New York Mercantile Exchange, while August Brent crude /zigman2/quotes/209704782/delayed UK:BRN00 +0.19% /zigman2/quotes/209704782/delayed UK:BRN00 +0.19% gained 55 cents per barrel, or 1.6%, to finish at $35.29 on ICE Europe.
The Energy Information Administration said inventories rose 7.9 million barrels in the week ended May 22. Oil had been under pressure after the American Petroleum Institute late Wednesday reported that crude inventories rose 8.7 million barrels last week. Analysts surveyed by S&P Global Platts had expected the more closely followed EIA report to show crude inventories fell by 1.2 million barrels.
The rise in inventories reflected a surge in imports of oil from Saudi Arabia as a much publicized flotilla of tankers carrying crude from the kingdom begin to arrive, a legacy of the short-lived price war between the Saudis and Russia that amplified a collapse in crude prices in March and April.
Matt Smith, director of commodity research at ClipperData, said imports of Saudi crude into the U.S. Gulf Coast were at 2.05 million barrels a day last week — a record clip.
Meanwhile, gasoline stocks fell 700,000 barrels, while distillates were up 5.5 million barrels. The S&P Global Platts analysts had forecast a supply decline of 1 million barrels for gasoline and a stockpile increase of 2.5 million barrels for distillates. Crude supplies at Cushing, Oklahoma, the New York Mercantile Exchange delivery hub, fell 3.4 million barrels.
The data showed gasoline demand was up 463,000 barrels a day, or 6.8% to 7.253 million barrels a day, but still down 22.8% from last year, noted Robert Yawger, director of energy at Mizuho Securities U.S.A., in a note.
“WTI initially traded to negative territory after the EIA report came out on the knee-jerk reaction to the 7.9 million build in crude-oil storage, which is actually a build of 10.0 million when new barrels at the [Strategic Petroleum Reserve] are added,” Yawger said. “However, the market soon switched to the green after taking into consideration the big draw at the Nymex delivery point at Cushing, and the 463,000 bpd increase in gasoline demand.”
July gasoline futures /zigman2/quotes/210286597/delayed RB00 +0.47% rose 0.8% to end at $1.026 a gallon, while July heating oil fell 3.4% to 97.52 cents a gallon.
July natural-gas futures ended with a loss of 5.90 cents per million British thermal units, a fall of 3.1% to $1.8270. The EIA said working gas in storage rose by a net 109 billion cubic feet in the week ended May 22. Analysts surveyed by S&P Global Platts had forecast, on average, an injection of 81 billion cubic feet.