Economy- Oil, Gas Prices Jump –

Posted: September 28, 2012 in Uncategorized

September 27, 2012

NEW YORK—-Crude oil futures prices rebounded Thursday after hitting two-month lows a day earlier, pulled up by rising gasoline prices.

Traders aggressively snapped up contracts for October-delivery reformulated gasoline blendstock for a third straight day ahead of the contract’s expiration on Friday.

October gasoline jumped intraday to a five-month high of $3.21 a gallon, a level that, if sustained, would translate to a nationwide average of above $3.90 a gallon for regular gasoline at the pump. At that level prices would be the highest since April and about eight cents above prices at the start of this week.

Gasoline futures prices have surged 22.7 cents, or 7.8%, in the last three days, including a 2.1% gain on Thursday, as data from the Energy Information Administration show nationwide inventories at their lowest level since October 2008, while stocks in the Northeast U.S. are at their lowest level since EIA began keeping records in November 1990. EIA said that while outright levels are low, supply isn’t as tight as it appears, since demand has declined.

Andy Lebow, senior vice president for energy futures at Jefferies Bache, said the strength in gasoline spilled over into crude oil futures despite relatively high crude oil inventories in the U.S. He said that refiners returning from shutdowns will need to boost crude processing to boost inventories of refined products.

“The products are very strong,” Mr. Lebow said. “If you are looking for supply tightness, it’s not on the crude oil side.”

Light, sweet crude oil for November delivery on the New York Mercantile Exchange climbed $1.87 a barrel, or 2.1%, at $91.85 a barrel, its biggest one-day gain since Aug. 3. November Brent on the InterContinental Exchange gained $1.97, or 1.8%, to $112.01 a barrel.

Crude shook off a mixed bag of U.S. economic data. U.S. August durable-goods orders fell 13.2%, the largest decline since January 2009, the Commerce Department said. Economists had expected a drop of 5.6%. At the same time, Commerce also announced U.S. second-quarter gross domestic product growth was revised down to 1.3%, while economists expected a reading of 1.7% growth.

That data overshadowed a stronger U.S. weekly jobless claims report. New claims fell last week to the lowest level since July, to 359,000, the Labor Department said. Economists had expected 375,000 new claims for jobless benefits.

“We had the good, the bad and the ugly,” said Matt Smith, analyst at Summit Energy. “This shows the economy is still weak and the best we can hope for is that QE-infinity will spur a bit of growth,” he said, referring to the Federal Reserve’s market stimulus plan.

Nymex October RBOB settled up 6.32 cents at $3.1443 a gallon, a one-month high.

October heating oil settled 5.05 cents higher, at $3.1573 a gallon.


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