Oil, Natural Gas Advance on Storm Fears

A cyclone near the Persian Gulf trumped bearish inventory numbers to boost energy futures.
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Crude futures advanced Wednesday on news of a cyclone bearing down on a major Middle Eastern shipping port and other geopolitical concerns, while ignoring bearish inventory figures.

After piercing the $66 barrier, the July crude contract settled 37 cents above its previous close at $65.98 a barrel. Reformulated gasoline slid 2 cents to $2.19 a gallon. Heating oil gained a penny to finish at $1.97 a gallon.

Natural gas advanced 5 cents to $8.11 per million British thermal units.

Cyclone Gonu reached Oman Tuesday and has affected oil shipments to a small degree. However, the cyclone has weakened significantly since it first arrived in the Gulf of Oman, allowing oil tankers to sail through the Straight of Hormuz and navigate around the storm, according to Dennis Gartman, publisher of

The Gartman Letter

.

Although traders are waiting to receive the final report on possible infrastructure damage or supply disruptions, it is unlikely that the cyclone had any major impact, according to analysts at Barclay's Research.

Energy markets were also shaken Wednesday by rumors that Turkey sent troops across the Iraqi border to chase Kurdish guerillas. Neither Turkey nor the U.S. Department of Defense were able to confirm the report, and by Wednesday afternoon the rumors were being largely ignored by oil traders.

Meanwhile, the Energy Information Administration released a report showing petroleum reserves were increasing for the week ending June 1.

Crude inventories gained 112,000 barrels during the week, nearly meeting analyst estimates of 125,000 barrels. Gasoline stores grew by 3.5 million barrels, which was significantly more than the 1.6 million barrel injection expected by analysts.

Distillates grew by 1.8 million barrels. Analysts were expecting a 900,000 barrel increase.

Stocks in the energy complex finished the session broadly lower. The

CBOE Oil Index

fell 1.3% to 741.98.

ConocoPhillips

(COP) - Get Report

,

Chevron

(CVX) - Get Report

and

Exxon

(XOM) - Get Report

all finished the day to the downside.

Morgan Keegan upgraded

Patterson-UTI Energy

(PTEN) - Get Report

to market perform from underperform, as well as

Basic Energy Services

(BAS) - Get Report

and

Natural Gas Services

(NGS) - Get Report

to outperform from market perform. Patterson-UTI's shares fell 1.2% to $26.61. Basic Energy Services rose 2.3% to $27.27. Natural Gas Services climbed 5.4% to $19.24.