Crude oil prices in the New York market briefly declined in trading on June 25 after a weekly government report showed an unexpected gain in US crude oil inventories but oil prices rebounded before the closing, which analysts attributed in part to refineries running at higher capacity than anticipated.
Benchmark West Texas Intermediate crude for August delivery edged 10 cents lower to close at US$105.74 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark used to price international oils used my many U.S. refineries, rose nine cents to close at US$113.30 a barrel in London.
“Historically, this is the time of year that refiners really crank out in preparation to supply for the summer driving season,” Kyle Cooper, a managing partner at IAF Advisors in Houston, told the Wall Street Journal.
US refineries ran at 88.5% of capacity for the week ended on June 20, the Energy Information Administration said in its weekly petroleum report. Analysts surveyed by the WSJ before the report was released had forecast a refining capacity of 87.9%.
The report comes after the Energy Information Administration on Wednesday reported an unexpected build in US crude inventories last week. A rise in US stockpiles is typically indicative of weakening demand in the energy-guzzling nation which would in turn put pressure on prices.
Oil prices were hovering after a sharp drop the day before that analysts said may be a sign investors are starting to expect that the violence in Iraq won’t spread to the oil-producing south.
“Although the situation in Iraq remains volatile, last night’s decline in oil prices may be an early sign that markets are beginning to position for the likelihood that insurgents will be contained from any further incursions to the south, allowing oil exports to be maintained,” said CMC Markets chief analyst Ric Spooner in Sydney.