The energy market on Wednesday
Posted on Sunday, March 8th, 2009 | In Energy Markets, Gold MarketsIn the energy market on Wednesday, crude for April delivery jumped $3.73 to close at $45.38/barrel. April reformulated gasoline finished at $1.3816/gallon.
Part of the gain in crude is being attributed to newly released data that showed a surprising decline in U.S. crude inventories and investors’ anticipation of a new stimulus plan from China, the world’s second-biggest oil consumer.
U.S. crude inventories, excluding those in the Strategic Petroleum Reserve, fell by 700,000 barrels in the week ended Feb. 27, the Energy Information Administration reported. Analysts surveyed by Platts had expected an increase of 2.2 million barrels.
Inventories at Cushing, Okla., the delivery point for Nymex crude futures, fell for a third straight week from their record high, down 500,000 barrels to 34 million.
The unexpected reduction in crude inventories “is supportive” to oil prices, wrote Hussein Allidina, an analyst at Morgan Stanley, in a note to clients. He also noted that despite the decline, inventories remain at “very high” levels.
Meanwhile, the American Petroleum Institute reported that crude supplies fell by 463,000 barrels in the week ended Feb. 27. The API also said that gasoline supplies dropped by 642,000 barrels, while distillate stocks rose by 1.64 million barrels.
The possibility of additional Chinese stimulus also boosted demand hopes.
Chinese Premier Wen Jiabao is considering new stimulus measures, adding to a $585 billion spending plan to revive the country’s economy, former statistics bureau chief Li Deshui said in Beijing ahead of today’s National People’s Congress.
“Crude prices were higher on increased optimism the Chinese economy would recover swiftly from the current downturn,” wrote Nimit Khamar, an analyst at Sucden Financial Research.
Unfortunately, this optimism is likely misplaced.
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