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Mixed Day on the Energy Front

Chuck Marvin

Energy futures moved in a narrow range and finished mixed Thursday as a variety of both bullish and bearish influences kept traders from settling on a direction.

The July light sweet crude contract advanced 52 cents to $64.01 a barrel on the New York Mercantile Exchange. Reformulated gasoline lost 2 cents, closing at $2.25 a gallon. Heating oil slid 3 cents to $1.85 a gallon.

The near-term natural gas contract remained unchanged at $7.94 per million British thermal units.

New inventory figures from the Energy Information Administration were prominently on traders' minds. Crude inventories fell by two million barrels for the week ended May 25, whereas analysts had been expecting a one-million-barrel build.

Distillate inventories grew by 147,000 barrels during the week, which was less than the 700,000 barrels that analysts were anticipating. Gasoline inventories were roughly in line with expectations, climbing by 1.4 million barrels.

Refinery utilization rates remained unchanged from the previous week at 91.1%.

After trading lower through most of the session, crude prices shot up into positive territory later in the day. "The upward move was a short-covering bounce," says Edward Meir, analyst at Man Financial. "The market was oversold going into today's session, and crude's failure to break down after the EIA released its inventory report prompted the short-covering."

The Colonial pipeline, which supplies 100 million gallons of gasoline and other petroleum products a day to key markets in the southeast U.S., is reportedly reopening some sections after being entirely shut-in on Tuesday. A Colonial representative didn't elaborate on what caused the pipeline problem.

"There remains lots of crude stock in the system, so the stoppage of the Colonial pipeline didn't do much," Meir said. "If problems persist over the next few days, they may begin to have more of an effect on futures prices."

Elsewhere, Royal Dutch Shell(RDS.A Quote)announced that it was working to restart its pipeline that supplies 150,000 barrels a day to the Bonny oil export terminal in Nigeria. The pipeline was sabotaged by protestors on Wednesday.

Also in Nigeria, four Americans who had been taken hostage by rebel groups were released. Still though, 20 foreign workers remain in the hands of militants.

The CBOE Oil Index eased 0.2% to 735.56. ConocoPhillips (COP Quote) gained 0.2% to $77.43. Chevron (CVX Quote) dropped 0.9% to $81.49. Exxon Mobil(XOM Quote) fell 1% to $83.17.

Bank of America Securities downgraded a swath of ethanol stocks, saying that expected production growth will likely hurt profit margins.

Andersons (ANDE Quote) was downgraded to neutral from buy, while Verasun Energy (VSE Quote), Pacific Ethanol (PEIX Quote) and Aventine Renewable Energy (AVR Quote) were all cut to sell from neutral.