Miscalculation:Big drop in crude stocks( API)

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API posts big drop in crude stocks

By Myra P. Saefong, CBS.MarketWatch.com Last Update: 6:06 PM ET Aug 22, 2000 NewsWatch Latest headlines

NEW YORK (CBS.MW) -- October crude futures rallied to more than $32 a barrel in overnight Tuesday trading after a key report said crude inventories as of the week ended Aug. 18 plunged 7.8 million barrels -- a dramatic turnabout from the forecast rise of at least 300,000 barrels.

"Forget everything else -- we're back to record-low stocks again," Phil Flynn, a senior energy analyst at Chicago brokerage house Alaron.com, exclaimed just after the data was released. He also said the latest data was a "shocker" and will have "explosive" effects.

In after-hours Access trading, October crude oil added 84 cents, or 2.7 percent, to $32.06 a barrel.

After the markets closed, the American Petroleum Institute said crude stocks, as of the week ended Aug. 18, dropped a whopping 7.8 million barrels to total 279.7 million barrels.

Miscalculated

The data defied market expectations for a 300,000-barrel to 700,000-barrel rise, according to a Bridge New survey.

Gasoline inventories fell 1.14 million barrels, the API said, on the high end of expectations for a drop of 800,000 barrels to 1.2 million barrels.

API's measure of distillate supplies, which include heating oil and diesel fuel, unexpectedly declined by 2.9 million barrels, despite expectations for a rise of 2.5 million to 2.9 million barrels.

Meanwhile, refinery production rose to 96.9 percent of capacity from the prior week's revised 95.7 percent, the API reported.

Ahead of the news on the New York Mercantile Exchange Tuesday, September crude fell $1.25 to close at $31.22 a barrel. October crude, which is now the front-month contract, fell 76 cents to $31.22.

September heating oil declined 1.97 cents to 90.35 cents per gallon, and September unleaded gasoline slipped 2.60 cents to 93.33 cents per gallon. September natural gas fell 22.7 cents to $4.52 per million British thermal units.

Contract expiration, waning hurricane fears pressure oil

Oil shares closed almost flat while prices fell Tuesday, pressured by the expiration of the September contract and waning concerns that a hurricane will affect production in the Virgin Islands or the Gulf of Mexico.

"Forecast models differ on whether the storm (Hurricane Debby) will track into the Gulf of Mexico or will turn north toward the Bahamas," according to a report from New York-based IFR Pegasus.

The market will continue to keep a close watch on the storm's direction. Its effect on production at Hovensa's St. Croix refinery in the Virgin Islands is minimal, according to Bridge News, and it doesn't appear to be headed for the Gulf of Mexico, a major oil- and natural gas-producing region.

However, no one is really sure where Debby will end up, Flynn said. The storm season, coupled with the latest crude supply data, should provide good support for the market on Wednesday, he said.

In the equities market, the Philadelphia Oil Service Index ($OSX: news, msgs) closed unchanged. Shares of Transocean Sedco Forex (RIG: news, msgs) added 2 3/8 to 55 7/8. See related story.

The CBOE Oil Index ($OIX: news, msgs) fell 0.2 percent as shares of Texaco (TX: news, msgs) fell 1 1/8 to 52 3/16 and Kerr-McGee shares (KMG: news, msgs) gained 13/16 to 61 1/4

http://cbs.marketwatch.com/news/includes/onmoney_popup.htx?source=htx/test_mld

-- Martin Thompson (mthom1927@aol.com), August 22, 2000

Answers

http://cbs.marketwatch.com/archive/20000822/news/current/crude.htx?sou rce=htx/http2_mw

-- Another link (for@the.article), August 23, 2000.

http://www.bloomberg.com/bbn/topfin_2.html?s=AOaNMfhQoQ3J1ZGUg

LINK

Wed, 23 Aug 2000, 1:47am EDT

Crude Oil Jumps as U.S. Inventories Drop to Near 24-Year Low

By Taizo Hirose

Tokyo, Aug. 23 (Bloomberg) -- Crude oil rose as much as 3 percent as U.S. inventories unexpectedly fell 2.7 percent last week to close to a 24-year low, raising concern about winter heating oil supplies.

The 7.77 million-barrel decline to 279.71 million barrels left crude inventories close to the low of 279.0 million two weeks ago. Heating oil supplies, meantime, are 39 percent lower than a year ago, signaling supplies could be short for winter.

The report was ``a shocker,'' given how far inventories had already fallen, said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc. in St. Louis.

Crude oil for October delivery rose as much as 92 cents, or 3 percent, to $32.14 a barrel in electronic trading in Asia on the New York Mercantile Exchange. Oil prices rose for a fifth day in six, bringing gains for this month to 18 percent.

Inventories of distillate fuels, such as heating oil and diesel, fell 2.89 million barrels to 111.18 million. Analysts surveyed by Bloomberg expected a gain of 1.3 million to 2 million barrels.

Heating oil ``stocks were virtually unchanged,'' said O'Grady. ``At this time of year they should be rising, and pretty significantly.''

Heating oil for September delivery rose as much as 2.65 cents, or 2.9 percent, to 93.00 cents a gallon in electronic trading on the Nymex. Prices are up 23 percent this month.

``It's scary to think what's going to happen if a cold snap hits the U.S. this winter,'' said Tsutomu Toichi, director at the Institute of Energy Economics, Japan.

Japan Short

Analysts said Japan also faces a heating fuel shortage as refiners were expecting oil prices to fall, which discouraged suppliers from building kerosene inventories for winter.

``Kerosene supplies are certain to become tight this winter, driving domestic prices higher,'' said Naohiro Jokei, manager of the petroleum products section at Itochu Corp., Japan's second- largest trading company. Japan is the second-biggest consumer of oil after the U.S.

Oil inventories have declined even after the Organization of Petroleum Exporting Countries boosted output twice this year. OPEC, which pumps about 40 percent of the world's crude, has increased daily production this year by around 2 million barrels, or 2.7 percent of world daily output.

OPEC is considering whether to boost production in September to cool prices near nine-year highs.

``Unless OPEC gives a very clear signal before their September 10 meeting that they plan to increase oil output, (WTI) will stay between $32 and $34,'' said Byung Jae Lee, a crude oil trader at Hyundai Oil Refining (Singapore) Pte.

OPEC said it would increase oil output 500,000 barrels a day only if the so-called OPEC basket price -- the average price of six crude grades produced by OPEC members and one crude pumped by Mexico -- breaches $28 a barrel for 20 consecutive days. Prices exceeded $28 a barrel on six consecutive days through Monday, Aug. 21, the last time OPEC updated its basket price.

``Adding 500,000 barrels a day is not enough, OPEC has to increase output by at least another 1 million barrels a day'' to meet current demand, said Lee at Hyundai Oil.

-- (W@tching.closely), August 23, 2000.


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