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oil price soars more than 3pc Will definately give STO a smile!

Oil price soars more than 3pc
From correspondents in New York
26feb04

CRUDE oil futures settled 3.2 per cent higher overnight on the New York Mercantile Exchange, as a bigger-than-expected draw in gasoline inventories fed traders' fears that supplies would continue to fall.

US commercial gasoline inventories fell last week by about 1 per cent, leaving stocks well below average levels for this time of year as refinery operations fell off sharply, the Department of Energy's statistics branch said yesterday.

Gasoline futures climbed on the report, chasing crude and heating oil futures higher, but not above levels seen last week. Gasoline prices, however, reached levels not seen since late August.

According to the Energy Information Administration, gasoline stocks fell 1.6 million barrels to 203.4 million barrels last week, marking a much deeper draw than analysts had expected.

"There is a tightness in the gasoline market," James Steel, director of New York research for Refco LLC, a futures and options brokerage firm, said. "It looks like it's acting pre-seasonally, and there's big anticipation we're going to see firmer prices."









The April light, sweet crude contract settled at $US35.68 a barrel, rising $US1.10 after trading as high as $US35.90 on the day.

Crude prices jumped just after the release of inventory data yesterday morning and then made new highs for the day shortly before settlement.

"People keep trying to sell the highs and then the market keeps going up through them," Chris Hufferdine, a booth manager on the trading floor for NorthStar Oil Corp. in New York, said. "In the medium-term, people think the market is going to head lower, but it keeps turning against them."

On London's International Petroleum Exchange, April Brent settled up US76c at $US31.57 a barrel.

March gasoline futures rose US3.45c to settle at $US1.0589 a gallon after rising as much as US3.56c, or 3.5 per cent, to $US1.0640 a gallon.

The higher-volume April contract rose US3.62c to settle at $US1.1135 a gallon after spiking as much as US4.37c, or 4.1 per cent, to $US1.1210 a gallon - above the high last Thursday of $US1.115 a gallon. A front-month gasoline contract has not soared to these levels since August 25, just before the high-demand Labor Day holiday.

Gasoline inventories have fallen in four of the past five reporting weeks - a period when they normally build - leading the EIA to warn that markets will remain tight at least through the high-demand summer driving season.

The draw in gasoline in the week ended February 20 left inventories 1.2 per cent below the year-ago level and 4.5 per cent below the five-year average, the EIA said.

"Gasoline, I definitely think is solid and the leader," Kyle Cooper, an energy analyst for Citigroup in Houston, said. "The drop in gasoline is a concern. Normally, you see gasoline inventories pick up a little bit by now, and they're not."