Crude Futures Prices Rebound Despite Larger-Than-Expected Stock Build

Strategic Insights -

Crude futures prices showed remarkable resilience, shrugging off a larger-than-expected stock build, as traders described the move as "very positive". The September crude contract on the New York Mercantile Exchange (Nymex) settled up 8 cents at $17.55/bbl, after recovering from a new daily low of $17.31. Analysts attributed the comeback to underlying strength in crude supply tightness, with some predicting a retest of $18/bbl.

Key Takeaways:

  • Crude futures prices rebounded despite a larger-than-expected stock build, settling up 8 cents at $17.55/bbl.
  • The market's resilience was attributed to underlying strength in crude supply tightness, with some analysts predicting a retest of $18/bbl.
  • Alan H. Levine, a Washington, D.C.-based analyst with Dean Witter Reynolds, stated that "crude's comeback was very meaningful and the market is likely to continue higher."
  • Timothy Evans of the New York-based Pegasus Econometric Group believed the market will eventually trade above $18.02/bbl, with prices in the $18.50-$19 range a possible objective.

Statistics:

  • Crude stocks were 16 million bbl below year-ago levels.
  • Gasoline output decreased by 304,000 b/d.
  • Gasoline imports declined despite the build.
  • The 281,000 bbl gasoline build indicated stalled demand.
  • Reformulated gasoline (RFG) stocks increased by 1.76 million bbl in the high-demand East Coast region.
  • Heating oil prices settled up 0.48 cents at 49.22 cents/gallon in the September contract.

Sources:

  • Alan H. Levine, Dean Witter Reynolds
  • Timothy Evans, Pegasus Econometric Group

* New York Mercantile Exchange (Nymex)