WSJ: OIL FUTURES: Nymex Crude Gains Ahead Of US Inventory Data
By Edward Welsch
Of DOW JONES NEWSWIRES
OTTAWA (Dow Jones)--Crude oil futures rose in early trading Wednesday morning ahead of data expected to show a decline in U.S. oil and fuel inventories and a Federal Reserve interest rate decision.
Light, sweet crude for January delivery rose 0.8% to $71.28 in recent trading on the New York Mercantile Exchange. The January Brent crude contract on the ICE futures exchange, which expires later Wednesday, rose 1.2% to $72.94.
Oil's rise follows the end of a nine-day losing streak Tuesday based in part on hopes that data from the U.S. Energy Information Administration would signal improved demand through a decline in high stockpiles of oil and oil products.
In a Dow Jones Newswires survey, analysts gave an average forecast for a decline in oil inventories of 1.7 million barrels, an increase in gasoline stocks of 1.4 million barrels and a drop in distillate stocks of 600,000 barrels. Refinery utilization is seen rising 0.3 percentage point, to a still historically low 81.4% of capacity.
According to a report by the American Petroleum Institute, an industry group, oil inventories rose by 900,000 barrels, gasoline stocks rose by 2.1 million barrels, distillates, which include heating oil and diesel fuel, dropped by 2.6-million-barrels, and the refinery utilization rate slowed substantially, to 78.6%.
As oil declined this month, many market watchers have predicted that oil would at least temporarily enter a new, lower trading range. As signs of economic recovery appear, traders keep a close watch for any sign of the Federal Reserve's future plans to raise interest rates.
"The price of oil is probably looking ahead to the time when we are going to remove some of the economic stimulus, which has supported energy prices," said Phil Flynn, an oil analyst at PFGBest in Chicago. "If the Fed starts talking about an exit strategy, that puts the dollar in a better position, and puts downward pressure on oil prices," he said.
The U.S. dollar continued to show strength Wednesday morning, trading at nearly a three month high at $1.4543 against the euro.
Front-month January reformulated gasoline blendstock, or RBOB, recently traded 1.21 cents, or 0.7%, higher at $1.8572 a gallon. January heating oil recently traded 2.47 points, or 1.3%, higher at $1.9280 a gallon.
