EIA inventories down, spurring oil prices again

Crude oil prices rose significantly on Wednesday after the release of the weekly US inventory figures by the US Energy Information Administration. The EIA figures showed that US crude oil inventories were down by 6.6 million barrels in the week ending September 9. Stockpiles were only expected to be 1.4 million barrels lower on the week.

Analysts believe the decline is a temporary one that will be remedied by the delivery of oil reserves from IEA members who have released oil to help out the US while production facilities in the Gulf of Mexico are down.

Even so, October contracts for West Texas Intermediate crude on the New York Mercantile Exchange gained $1.98 to $65.09 per barrel, while Brent crude October futures on the International Petroleum Exchange was up $1.76 to $63.37 per barrel.

EIA data showed a surprising gain of 1.9 million barrels in the US gasoline inventory, against an expected decline of 2.5 million barrels on the week. There was some opinion that part of this gain was the result of a decline in demand at the pumps, while others felt it was simply a dislocation of the data due to the hurricane.

While refineries have pushed aside refining of other products to concentrate on gasoline production in the wake of Gulf Coast refinery shutdowns after Hurricane Katrina, it is now believed that it will take longer than expected to get refineries back online. It is expected to take several months to get three of the refiners back up and running.

Nymex October gasoline futures were up 0.5 cent to $1.8590 per gallon. Nymex October heating oil also was up, by around 4.5 cents to $1.8850 per gallon, as distillates inventories dropped by 1.1 million barrels, when a decline of only 200,000 barrels had been expected. Henry hub natural gas was also up a bit to $10.98 per million British thermal units.