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OIL FUTURES: Crude Rises To 3-Mo High; Stocks Fall December 20, 2006

Posted by notapundit in Economic News.
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NEW YORK (Dow Jones)–Crude oil futures rose to a three-month settlement high after the U.S. said Wednesday that crude stockpiles fell well below analysts’ expectations last week.

While stocks fell by more than triple analysts’ forecasts, price gains were tempered by builds in stockpiles of gasoline and distillates, which include heating oil and diesel, and because part of the big crude draw was attributed to fog interrupting shipping in Gulf of Mexico.

The front-month February light, sweet crude contract on the New York Mercantile Exchange rose 26 cents, or 0.4%, to $63.72 a barrel, the highest settlement for a front-month contract since since Sept. 18. Intraday prices rose as high as $64.15, the most since Sept. 19. Brent crude on the ICE futures exchange rose 42 cents to $63.23 a barrel.

“The market has reacted like there was less of a crude draw, I think because most of the fall is being seen as being caused by the delays” to shipping, rather than permanent supply problems, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “There wasn’t enough in the report to get crude up to $70, but not enough to slow a rising market either.”

Crude oil inventories fell by 6.3 million barrels, DOE said in its weekly inventory report, well beyond analysts’ expectations of a 1.8 million-barrel draw. Distillate stocks rose by 1.2 million barrels, compared with forecasts of a 1.1 million-barrel fall, and gasoline stockpiles grew by 1 million barrels, compared with predictions for little change.

Crude import levels dropped by 7.3% to 8.902 million barrels a day, according to the DOE’s Energy Information Administration, the lowest rate since October 2005.

Imports were likely affected by heavy fog in Texas and Louisiana coastal regions, which set in five days ago and has interfered with oil vessel traffic on key waterways. It is also expected to impact next week’s report.

Still, crude stockpiles remain well above historical averages, the DOE said.

“This likely will not impact the market for long, as there is a significant backlog of ships awaiting the (Houston shipping) channel opening, and we expect a flood of imports to hit the market over the next two weeks,” said Daniel Barcelo, an analyst at Bank of America in New York, in a research note.

January heating oil, which is down 4.5% for the month on forecasts for warmer-than-normal weather, rose 1.17 cents, or 0.7%, to $1.7304 a gallon. Front-month reformulated gasoline blendstock for oxygen blending, or RBOB, fell 1.76 cents, or 1%, to $1.693 a gallon and unleaded gasoline was down 2.46 cents at $1.6759 a gallon.

Alaron’s Flynn attributed the moves of both heating oil and gasoline to profit-taking, with traders buying heating oil to lock in gains made betting it would fall and selling RBOB to collect on bets prices would rise.

Following are prices for selected Nymex and ICE contracts and their comparison to values at the prior day’s settlement. Highs and lows include levels hit in overnight trade.

Prices for crude oil are in dollars a barrel and the change is in cents; prices for Nymex products are in cents a gallon and the changes are in points; prices for ICE gasoil are in dollars a ton and the change is in cents. Highs and lows were accurate as of the 2:30 p.m. EST close of Nymex open outcry trading.

Nymex Prices:
Contract Settle Change Vs Low High
Tuesday
Feb crude oil 63.72 +26 63.18 64.15
Mar crude oil 64.77 +48 64.02 65.04
Jan heating oil 173.04 +117 171.20 175.15
Feb heating oil 176.93 +101 175.35 178.95
Jan gasoline 167.59 -246 167.40 170.50
Jan RBOB 169.30 -176 168.09 171.60
Feb RBOB 169.70 -101 168.73 171.60

ICE Prices:
Contract Settle Change Vs Low High
Tuesday
Feb ICE Brent 63.23 +42 62.55 63.59
Mar ICE Brent 64.18 +57 63.34 64.50
Jan gasoil 548.75 +1200 538.25 550.75
Feb gasoil 554.25 +1125 544.50 556.25

By Matt Chambers, Dow Jones Newswires

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