Crude inventory swells for 8th week

Oil prices remain lower following EIA report, even though gasoline stocks fell more than expected.

April 6, 2005: 11:21 AM EDT
 
NEW YORK (CNN/Money) - U.S. crude supplies climbed for the eighth straight week while gasoline supplies fell, the government reported Wednesday, as oil futures bounced off morning lows.

At 11:20 a.m. ET, light crude for May delivery was up 11 cents to $56.15 a barrel on the New York Mercantile Exchange. London Brent crude for May lost 44 cents to $55.

The U.S. contract held at around $55.50, a 54-cent decline, after the Energy Information Administration announced that crude oil inventories rose by 2.4 million barrels from the previous week, higher than the 2.2 million barrels forecast by Reuters.

But total motor gasoline inventories dropped by 2.1 million barrels last week, much more than the 1.3 million barrel decline forecast by Reuters.

Distillate fuels, used for heating, posted a surprising gain. The inventory rose 700,000 barrels, the report said, compared with a forecast for a 1 million barrel loss.

"Clearly there does not appear to be a problem getting crude," Bill O'Grady, an analyst at A.G. Edwards, told Reuters. "This report was neutral except distillate, which was bearish, as refiners expected a draw."

"Gasoline stocks are already high, so there so the draw there is no problem," said O'Grady, adding that the spring gasoline build should begin in about three weeks.

Gasoline futures lost 2.8 cents to $1.66 a gallon in New York.

The EIA said the current gas supply is above the average range for this time of year, with gasoline production up substantially last week, averaging over 8.6 million barrels per day.

And at 317.1 million barrels, crude inventories are near the upper end of the average range for this time of year, the administration said.

Last week saw an unexpectedly large increase in crude inventories to their highest level in nearly three years, and over the last eight weeks they have increased a total of 22.8 million barrels, according to the administration.

However, the EIA said distillate fuel stocks remain in the lower half of the average range for this time of year; and that all of the increase was in low-sulfur diesel fuel.