August contract crude climbed back up to $57.80 a barrel after opening at $56.80 on the New York Mercantile Exchange in morning trades. Brent crude took off this morning to $56.70, up a dollar from the opening. Heating oil was up 4 cents and gasoline was up two.
Rises in inventories were unexpected as crude stocks rose 1.1 million barrels for the week and were up 23.6 million over a year ago to 328.5 million barrels. Gasoline stocks were up 300,000 barrels to 216.2 million, up 11.1 million barrels for the year. Distillates were up 1.7 million barrels to 113.2 million or 2.3 million barrels for the year.
Right now the oil market is stretched tight so these increases were welcome by many industry watchers. With OPEC pumping at capacity, U.S. demand higher than its ever been, and Chinese demand coming swiftly up behind the U.S., bullish traders charged through the markets and have been driving prices up for weeks. Monday, the price of oil hit nearly $61 a barrel, setting a new record after oil had climbed continuously last week.
The downside to the report was consumer prices continue to rise for both gasoline and diesel fuel. Average gasoline prices hit $2.22 a gallon up a nickel from the previous week and 29.4 cents for the year. Diesel fuel pricing hit $2.33 a gallon, up 2.3 cents or 64 cents for the year. It remains to be seen what the retail prices will do following the inventory numbers this week.
Even though many of these numbers seem promising, the bulls may still be sharpening their horns as the July 4th weekend approaches in the U.S. This holiday is one of the high points for gas consumption during the summer and will signal a rough midpoint until the Labor Day weekend.
When oil is stretched so thin, a number of facts both political and natural could change the course of oil trading. Hurricanes and terrorist problems remain threats as do refinery slow downs and host of other problems. One possibility for today’s climbs might be the recent debate over Iran’s new president-elect and specifically toward charges he was one of the terrorists that held American’s hostage for 444 days starting back in 1979. The terrorists stormed the U.S. embassy in Iran weeks after the Iranian revolution. The Iranian government has denied the allegations but a number of former hostages insist he was one of the leaders of the assault.
John Stith is a staff writer for murdok covering technology and business.
