Crude oil futures when higher Wednesday, rebounding from two days of losses as gasoline surged 5 percent on data showing supplies tightened last week and news of a production problem at Tosco's Philadelphia-area refinery.
May crude settled up 68 cents at $26.80 a barrel, reported Bridge News.
May Brent rose 38 cents to $25.00 on London's IPE. NYMEX Apr gasoline settled up 446 points, or 5 percent, at 90.23 cents a gallon; Apr heating oil gained 312 points to 71.61 cents a gallon.
"Both API and DOE reports were supportive for products and they were oversold Tuesday," said Tom Bentz, energy analyst at BNP Paribas, according to Bridge News.
Gasoline cash markets in the New York harbor, the delivery point for NYMEX futures contracts, as well as the U.S. Gulf and the Midwest all firmed following stock reports from the American Petroleum Institute and U.S. Department of Energy.
New York gasoline was further boosted by news that Tosco's Trainor, Pa. reformer is shutting Thursday for unplanned work. That comes after the DOE reported gasoline stocks were down 3.4 million, a steeper draw than the API's 1.689 million barrel decrease.
Despite the climb in product futures prices, brokers warned that recent rallies have tended to be used as selling opportunities and noted that concern over the economy has not abated.
For now, the energy complex appears to be responding to the inventory figures, but with the Dow Jones industrial average under continued pressure, brokers are concerned that sentiment could take another nosedive.
While crude inventories climbed last week, prices managed to rebound when DOE figures showed a smaller stock build than the API. Bridge News wrote.
The DOE said that crude stocks rose 5 million barrels last week, compared with the API figure of 7.595 million. DOE also reported Wednesday that distillates (including heating oil) were down 3.6 million, compared to API's 3.106-million-barrel fall.
Threats of oil workers strikes in Venezuela and Brazil were also supportive, brokers said.
Further, OPEC Secretary General Ali Rodriguez, said that OPEC may make further production cutbacks following its decision Saturday to slice output by 1 million barrels per day, as press reported.
One broker noted that the comments were similar to those made by the Saudi Arabian Oil Minister Ali Naimi on Saturday. "They're still studying the market and won't do anything yet," said another tyo Bridge News.
However, Bentz pointed out, that with the basket price moving close to OPEC's lowest acceptable threshold of $22 per barrel, further cuts may be close at hand. The basket price dropped 45c to $22.64 Monday and likely fell Tuesday.
© 2001 Mena Report (www.menareport.com)