C'mon - was this really so unexpected?
Nov. 16 (Bloomberg) -- Crude oil rose, rebounding from a four-month low, after an Energy Department report showed an unexpected decline in U.S. inventories.
Stockpiles of crude oil fell 2.2 million barrels to 321.4 million in the week ended Nov. 11, according to the report. A rise of 2 million barrels was expected, according to the median of forecasts by 14 analysts surveyed by Bloomberg. Prices also rose on speculation that heating oil demand will surge as a cold weather front moves into the eastern U.S. today.
``The big supply declines and colder weather will send us higher,'' said Bill O'Grady, an analyst with A.G. Edwards & Sons in St. Louis. ``We've probably seen the bottom and will rise from here.''
Crude oil for December delivery rose 62 cents, or 1.1 percent, to $57.60 a barrel at 11:46 a.m. on the New York Mercantile Exchange. Futures touched $56.70, the lowest since July 21. Prices have dropped 20 percent since reaching a record $70.85 on Aug. 30. Oil is up 25 percent from a year ago.
Crude-oil imports plunged 8.4 percent to 9.7 million barrels, the biggest one-week decline since September when Hurricane Rita delayed arrivals. Imports of petroleum products declined 12 percent to an average 4.1 million a day.
Gasoline Supplies
Gasoline supplies fell 952,000 barrels to 200.2 million, the first decline in five weeks, the report showed. An increase of 1.6 million barrels was forecast.
Gasoline for December delivery rose 2.06 cents, or 1.4 percent, to $1.477 a gallon in New York. Prices touched $1.45 yesterday, the lowest since May 31. Gasoline is up 21 percent from a year ago.
Regular gasoline at the pump, averaged nationwide, fell 1.6 cents to $2.276 a gallon yesterday. Prices are down 26 percent from the record $3.057 a gallon on Sept. 2, according to the AAA, the nation's largest motoring organization. Pump prices are 16 percent higher than a year ago.
Prices paid by U.S. consumers in October rose at the slowest pace in four months as energy costs receded from records a month earlier, the Labor Department said. The consumer price index increased 0.2 percent after a 1.2 percent rise in September that was the biggest in 25 years. Excluding energy and food, consumer prices also rose 0.2 percent.
Supplies of distillate fuel, a category that includes heating oil and diesel, surged 2.5 million barrels to 123.4 million last week, according to the department. Analysts expected an increase of 450,000 barrels. It was the first gain in eight weeks.
`Unexpectedly Large'
``The gain in distillate was unexpectedly large, which should eventually weigh on the market,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte. ``Distillate increased because a decline in demand coincided with an increase in imports.''
The amount of distillate fuel supplied, a measure of demand, fell 6.9 percent to an average 3.9 million barrels a day last week as warm weather covered the northern U.S., the report showed. Distillate imports jumped 10 percent to 547,000 barrels a day, the highest since March 2004.
``Distillate supplies rose and that's the critical number,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. ``Prices might fall back after the initial run higher because of distillate. The weather's been warm so it's not a huge surprise. It's still great to see an increase like that at the beginning of winter.''
Home-heating demand in the U.S. Northeast, where 80 percent of the nation's heating oil is consumed, will be 15 percent above normal through Nov. 23, according to Weather Derivatives, a forecaster in Belton, Missouri. The forecast was for demand to be 7 percent below normal a week ago.
`Indian Summer Is Over'
``It looks like the Indian summer is over,'' O'Grady said. ``It's getting colder and according to the forecasts it's staying cold.''
Heating oil for December delivery jumped 3.91 cents, or 2.3 percent, to $1.72 a gallon in New York. Prices touched $1.6788, the lowest since Aug. 1. Futures reached a record $2.21 on Sept. 1. Heating oil is up 30 percent from a year ago.
Brent crude for January delivery rose 58 cents, or 1.1 percent, to $55.76 a barrel on the London-based ICE Futures exchange, formerly the International Petroleum Exchange. Brent surged to a record $68.89 Aug. 30.
The Energy Department released its weekly report on petroleum inventories at 10:30 a.m. in Washington.
To contact the reporter on this story:
Mark Shenk in New York at mshenk1@bloomberg.net.
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