Oil up after surprise inventory dip

By Myra P. Saefong, CBS.MarketWatch.com Last Update: 10:16 AM ET Nov 1, 2000 NewsWatch Latest headlines

NEW YORK (CBS.MW) - Oil futures prices climbed above $33 a barrel Wednesday morning after key reports on U.S. petroleum supplies revealed a bigger-than-expected decline in last week's gasoline stocks and a surprise drop crude supplies.

Today on CBS MarketWatch Stocks fall in early trading WorldCom to split off MCI unit, warns on profits Aetna posts above-consensus earnings Nortel gives revenue, profit guidance Buffett buys way into U.K. insurance market More top stories... CBS MarketWatch Columns Updated: 11/1/2000 9:32:10 AM ET On the New York Mercantile Exchange, December crude rose 35 cents to $33.05 a barrel.

December unleaded gasoline climbed 1.21 cents to 88.80 cents per gallon and December heating oil added 0.42 cent to 94 cents per gallon. December natural gas rose 9 cents to $4.58 per million British thermal units.

After the market closed Tuesday, the American Petroleum Institute said supplies of crude oil, as of the week ended Oct. 27, fell 749,000 barrels. Early Wednesday, the Energy Department reported a 1.5 million-barrel decline.

This compares to average expectations for a rise of 2.1 million to 2.4 million barrels, according to analysts surveyed by Bridge News.

"Every week that goes by without a substantial build in crude inventories will make the market more nervous, as it realizes that announcements by OPEC do not always translate into more crude oil," Thorsten Fischer, an economist at Economy.com in West Chester Pa. said in a weekly report.

"The failure of any significant increase in crude-oil inventories will put prices up sharply and will continue to keep upward pressure on prices," he added.

Last week's gasoline inventories dropped 4.9 million barrels and 4.1 million barrels, according to the API and Energy Department, respectively. The data came in at about three times expectations for a 1.2 million-barrel to 1.5 million-barrel fall.

Gasoline stocks are now some 8 million barrels below year-ago levels, according to Fischer. "As refineries operate at capacity the gasoline market remains extremely tight, with prices expected to edge up," he said.

Meanwhile, the API's measure of distillate supplies, which include heating oil used during the winter season, rose 1.7 million barrels - about twice that of forecasts for a rise between 600,000 barrels and 1 million barrels. The Energy Department posted a 1.4-million-barrel increase.

Refinery production rates rose to 94.3 percent from the prior week's 93.4 percent of capacity, according to the API.

Gold gains on dollar weakness

Gold futures and shares of precious-metals companies edged higher early Wednesday, driven by a slight weakness in the U.S. dollar, which makes gold less expensive to traders overseas relative to their respective currencies.

On the Commodities Exchange division of the New York Mercantile Exchange, December gold rose 40 cents to $266.80. December silver added 0.7 cent to stand at $4.785 an ounce.

In the equities market, the Philadelphia Gold and Silver Index (XAU: news, msgs) and the CBOE Gold Index (GOX: news, msgs) rose 0.8 percent and 0.1 percent, respectively on the heels of gains in gold prices.

The CRB/Bridge Index, a broad-based measure of commodity futures markets, rose 0.1 percent to 221.40.

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-- Martin Thompson (mthom1927@aol.com), November 01, 2000

Answers

It seems we keep hearing these over and over: "Supplies are lower than we expected."

Now that October is over and we have a week to go before the elections, get ready.

-- (perry@ofuzzy1.com), November 01, 2000.