Crude Settles Above $80 Despite Supply Rise
NEW YORK (
) -- Crude oil for April delivery settled above $80 a barrel Wednesday despite a larger-than-expected surge in inventories. A weaker U.S. dollar and improving economic conditions fueled the rise.
The Energy Information Administration said oil inventory levels surged higher by 4.1 million barrels last week, reaching a total of 341.6 million. Platts forecast a rise of 1.1 million barrels.
Gasoline stocks swelled by 700,000 barrels, well beyond estimates for a 160,000-barrel jump. Distillate inventories fell by 900,000 barrels; analysts anticipated a 975,000-barrel drawdown.
An uptick in refinery operations provided a bright spot, as the utilization rate edged higher to 81.9% despite predictions for a tenth of a percentage point drop to 81.1%.
Still, with few hints of improving demand, investors appeared to shrug off the supply news as the April delivery contract for crude added $1.19, or 1.5%, to settle at $80.87 a barrel.
Other Nymex products also improved. The April heating oil contract gained nearly 4 cents, or 1.8%, to settle at $2.09 a gallon, and the April gasoline contract rose by 5 cents, or 2.3%, to settle at $2.25 a gallon.
Gene McGillian, analyst at Tradition Energy, said the crude market is "focusing on broader forces in the economy," with oil getting a lift today from the slumping dollar and strengthening equities.
The euro strengthened against the greenback after Greece offered a mix of reduced spending and rising taxes to shore up the country's mounting deficits. The dollar index, which tracks the dollar against a basket of currencies, fell 0.6%.
Stocks rose in the morning trading session, buoyed by an
improving labor market picture and
growth in the service sector.
The energy sector was one of the day's best performers, with the NYSE Arca Oil Index gaining 0.4%.
Oil service sector stocks showed particular strength after the EIA report, suggesting that news of the better refinery-utilization rate helped lift stocks. The Philadelphia Oil Services Sector Index rose 1.3% higher, led by sharp gains from
Cameron International
(CAM)
,
Nabors Industries
(NBR) - Get Report
,
Halliburton
(HAL) - Get Report
and
Weatherford International
(WFT) - Get Report
.
Natural gas for April delivery gained 5 cents, or 1%, to settle at $4.76 per million British thermal units, ahead of a separate EIA report on those storage levels due Thursday morning. Analysts polled by Platts are anticipating a withdrawal of 128 to 132 billion cubic feet in the week ended Feb. 26.
--Written by Sung Moss and Melinda Peer in New York
.
