Oil futures shed earlier losses Thursday after a government report
showed a drop in U.S. gasoline stockpiles and a pick-up in demand, even
as oil inventories rose to an 82-year high.
Light, sweet crude for July delivery recently rose 32 cents, or 0.3%, to $93.45 a barrel on the New York Mercantile Exchange.
The contract was well into negative territory earlier in the session, down 1.5% to a one-month low of $91.65 a barrel.
The reversal came after the Energy Information Administration
reported weekly U.S. gasoline demand rose to its highest level since
late August, as the summer driving season got underway. Meanwhile,
gasoline stockpiles fell by 1.5 million barrels--well more than the
200,000-barrel decline forecast by analysts in a Dow Jones Newswires
survey.
"Guys were pretty encouraged by the gasoline number, and it is
gasoline season," said Peter Donovan, vice president of Vantage
Trading, an oil options brokerage in New York. "Forget about the crude,
forget about the [heating oil] for a minute. Just look at the gas
number."
Gasoline futures shot higher after the report. Front-month
June reformulated gasoline blendstock, or RBOB, recently rose 2.04
cents, or 0.7%, to $2.8235 a gallon.
Traders appeared to shrug off bearish data on crude oil
stockpiles, which rose by 3 million barrels to the highest level since
May 1931, according to the EIA.
Distillate stockpiles, including heating oil and diesel, rose
400,000 barrels last week, while refinery runs fell 0.9 percentage point
to 86.4% of capacity.
Analysts had forecast a 400,000-barrel drop in oil inventories
and a 200,000-barrel rise in distillate stocks. Refinery runs were seen
rising 0.4 percentage point.
Traders appeared to have been prepping for an even larger rise
in oil stockpiles, after a separate report late Tuesday from the
American Petroleum Institute showed an unexpected 4.4 million-barrel
rise in oil stocks last week.
Oil futures have been caught in a tight range between $90 and
$97 a barrel for most of May, as tepid economic growth in much of the
world has kept prices in check while Middle East tensions keep a floor
under prices.
Ali al-Naimi, oil minister of Saudi Arabia, signaled approval
of current oil prices, a sign that ministers won't change output policy
at their Friday meeting in Vienna.
Futures were lower earlier in the session following a weak
reading on U.S. economic growth and a bigger-than-expected rise in U.S.
jobless claims. The data undermined the case for recovery in the world's
biggest consumer of oil.
The Commerce Department reported gross domestic product, a
measure of all goods and services produced in the economy, grew by 2.4%
in the first quarter, revised down from the 2.5% rate reported last
month.
June heating oil fell 0.5 cent, or 0.2%, to $2.8645 a gallon.