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Gasoline futures rise; crude oil fundamentals indicate tight supply
The Associated Press
Unleaded gasoline prices rose Sept. 5 on the New York Mercantile Exchange as traders bought contracts to cover earlier bets that prices would fall, but some analysts saw the upward move as short-lived.
Gasoline futures prices for October delivery settled up 0.87 cent at 86.15 cents a gallon. Analysts and traders had predicted the move, saying Sept. 2's 8.08 cent drop in gasoline futures prices showed the market had been oversold.
But analysts were divided about whether the upward move indicates a market rebound, or just helped investors pare some of the losses throughout the Nymex crude complex from earlier in the week.
�We're not expecting this to last,� said Derek van Eck, portfolio manager for Van Eck Associates in Manhattan. �In the next couple months, we expect inventories to continue to build through high product imports� and short-term increases in refinery operating rates.
On Sept. 2, light, sweet crude oil futures prices for October delivery fell $2.16 in the biggest one-day selloff since Sept. 24, 2001. Heating oil futures for October delivery also fell dramatically, down 5.54 cents a gallon.
�We've had a big move down here,� said futures analyst Tom Bentz with BNP Paribas. �In general, we probably oversold. Short covering on news is likely � but by no means does that change the trend. To me, (crude) will have to get back over $31 to change my opinion.�
The Sept. 2 selloff �is probably a seasonal drop that isn't going to last very long,� said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. U.S. summer driving season ends Analysts and traders attributed the drop in Nymex petroleum prices this week to the end of the typical U.S. summer driving season. But traders' focus will shift to refiners' typical ramping up of heating oil production ahead of the winter heating season, they said.
Despite ongoing supply concerns, light, sweet crude oil futures for October delivery settled down 10 cents at $28.88 a barrel Sept. 5 on the Nymex.
On London's International Petroleum Exchange, Brent blend crude oil futures also settled down 10 cents at $27.21 a barrel.
Crude oil fundamentals still indicate tight supply and strong demand, analysts and traders said. Underpinning worries about crude oil supplies are uncertainty over Iraqi oil production, low global petroleum inventories, indications the Organization of Petroleum Exporting Countries won't alter its output ceiling at its Sept. 24 meeting and a strike by white-collar oil workers in Nigeria.
U.S. government and industry petroleum inventory data Sept. 4 showed increases the last week in August in commercial storage of crude oil, gasoline and distillate fuels, which include heating oil.
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