Updated from 2:51 p.m. EST
Oil prices pared earlier losses but still closed lower Wednesday in Nymex floor trading as sellers responded to weekly inventory data from the Energy Department showing a greater-than-expected increase in crude stockpiles.
Oil inventories rose by 5.4 million barrels, more than twice the rate analysts had forecast. Distillate fuel fell 1.1 million barrels, roughly in line with estimates, while gasoline inventories fell 2.9 million barrels, about 1 million barrels more than expected.
The May futures contract closed 24 cents lower at $53.99 a barrel in Nymex floor trading, having fallen as low as $52.50 earlier. Gasoline prices were up more than 2.5 cents at $1.599 a gallon.
"Inventory levels are the highest they've been in three years, with private inventories reaching 314 million barrels, up from 286.2 million barrels in the same period last year, and a swelling Strategic Petroleum Reserve reaching 686.9 million barrels," said John Person, president of the National Futures Advisory Service, an investment research adviser in Palm Beach, Fla.
The high reserve levels in the U.S. will probably end the "explosive bubble of high oil prices" in a couple of months, Person says. He expects prices to fall to $47 per barrel, but reiterated that a long-term concern over global supply still remains, which means prices are not likely to go down below $40 a barrel.
On another front, OPEC signaled it was no longer considering another production increase, having agreed to boost output by 500,000 barrels a day at its meeting earlier this month. OPEC's next regularly scheduled meeting is in June.
The oil cartel said it would continue to monitor the market closely, but implied the recent slide eliminated any immediate need for additional action.
Prices have surged in 2005, following a sharp correction in the last two months of 2004 that briefly brought the benchmark crude close to $40 a barrel.At this time last year, oil was trading at about $36 a barrel.
Shares of most major oil producers were up in late trading.
gained 92 cents, or 1.58%, to $59.19;
increased 34 cents, or 0.59%, to $58.23;
( RD) gained 73 cents, or 1.23%, to $60;
rose 59 cents, or 0.89% to $62.13; and
increased $1.80, or 1.74%, to $105.43.
In other energy news,
( VTS), the oil exploration and drilling service company, gave investors preliminary earnings results for the second fiscal quarter ending Jan. 31. The company expects to report net income of $16.9 million, or 49 cents a share. This beats the average analyst estimate of 41 cents a share, according to Thomson Financial. Shares of Veritas DGC jumped $3.25, or 12.65%, to $28.94.
Delayed pipeline repairs led
to lower its first-quarter production guidance to 37 million to 39 million cubic feet per day, down from its previous guidance of 40 million to 44 million per day. Shares tumbled 6 cents, or 0.86%, to $6.31, after a 5% drop earlier.
Following an announcement made earlier this week regarding the company's failure to submit its 2003 financial restatement to the
has been reduced to a B- by Standard & Poor's, down from its previous debt rating of a B. S&P placed Key on its negative credit watch.
But the news about the Key filing issues apparently hasn't deterred buying of the stock. Shares are up 36 cents, or $3.41%, at $10.93.
"People seem to think there is inherent value in the company and are buying its shares now that it's cheap," said John Tasdemir, oil service analyst at Raymond James.
increased 22 cents, or 6.08$, to $3.84. Gordon Howald, equity analyst at Natexis Bleichroeder, says it is a "fast money stock." Dynegy's financial fundamentals are still "somewhat stressed" causing large portfolio managers to shy away from it, but increased buying today signals rapid traders such as hedge funds are playing, Howald says.