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[Bullwinkle]

Oil prices edge higher after US inventory report shows stock draw
Wednesday, March 22, 2006 5:31:50 PM
http://www.afxpress.com


LONDON (AFX) - Oil prices edged higher after a US government data showed energy stockpiles declined last week, but gains were limited by increased refinery runs, which indicated the refinery maintenance period is drawing to a close

At 4.58 pm, May-dated Brent contracts were up 28 cents at 62.39 usd, after gaining 79 cents to close at 62.13 usd yesterday. Meanwhile, May-dated US light crude futures were up 6 cents at 62.40 usd. The US Energy Information Administration said crude stocks fell by 1.3 mln barrels last week. Market expectations were for crude stocks, which stood at 7 years high the week before last, to gain a further 2.5 mln barrels

The agency also recorded week-on-week falls of 2.3 mln barrels in gasoline stocks and 0.8 mln barrels in distillates. Market expectations were for falls of around 1.2 mln barrels in gasoline and 2.2 mln barrels in distillates

Man Financial analyst Andy Lebow said on the face of it, the data was "bullish", with gasoline supplies down more than expected and crude stocks posting a surprise decline

However, the fact that the market has not rallied on the data shows that traders are largely discounting the numbers because they know the reported refinery run figures don't add up

The EIA said refinery runs rose by 255,000 bpd last week, indicating the maintenance season is drawing to a close. However, it also reported that gasoline production fell, averaging only 8.1 mln bpd

"Analytically it doesn't make sense, you won't see an increase in crude runs of that magnitude and not see a subsequent increase in gasoline production," said Lebow

He said the market knows this and so it is ignoring the numbers and looking ahead, instead, to the fact that refinery runs are improving, which means gasoline production should increase next week and stocks could build

Gasoline is in focus at present as traders fear stockpiles levels, which are currently above year-ago levels, could still be stretched tight in the peak demand US summer driving season

Their concerns are exacerbated by the US Energy Department's new greener fuels regulations requiring refiners to phase out the gasoline additive MTBE and replace it with a new, ethanol-blended gasoline

And gasoline concerns aside, the market remains supported by geo-political tensions in key producing countries, as the world has limited spare production capacity to counter supply disruptions

This is the primary reason why despite ample stockpiles, market participants are looking to build a stocks buffer that will mitigate against potential supply disruptions

Chief among these is the potential for disruptions in Iran, the world's fourth largest producer, which is currently engaged in a dispute with the West over its nuclear programme

Yesterday, the 5 veto-wielding members of the UN Security Council plus Germany put off a scheduled meeting on Iran after Russia and China blocked agreement on a statement aimed at quashing Iran's nuclear ambitions

Traders fear Iran could withhold oil sales if the Security Council threatens it with economic sanctions over its nuclear programme -- seen by the US and Europe as a front for a weapons drive

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=latestnews&pv_noticia=1143048708...


Crude supplies post slight decline: API
Wednesday, March 22, 2006 3:57:16 PM
http://www.afxpress.com


SAN FRANCISCO (AFX) -- The American Petroleum Institute said crude inventories fell 54,000 barrels for the week ended March 10. The Energy Department had reported a decline of 1.3 million. Motor gasoline inventories were up 308,000 barrels, contrary to the 2.3 million-barrel decline in the government's report. Distillate stocks fell 970,000 barrels, the API said

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=latestnews&pv_noticia=1143043003...