NYMEX crude oil futures ended modestly higher on Monday on the back of gasoline’s rise amid talk of a glitch in a Mississippi refinery.
The day’s gains stemmed a three-session loss. But the advance was tempered as the market remained under pressure after last week’s OPEC decision to increase production quotas.
U.S. petroleum inventories rose in the week to May 28, weighing on the market as well. At the same time, analysts forecast that for the week to June 4, crude and product stocks likely increased, adding to bearishness.
NYMEX July crude settled 17 cents or 0.4 percent higher at $38.66 a barrel, range-bound in the afternoon between $37.95 and $38.90. The day’s low was above the overnight nadir of $37.75 which marked its cheapest in five weeks.
Prices are down from the $42.45 record set last week which marked the highest in the 21 years that NYMEX has traded crude oil futures.
In London, July Brent settled 29 cents or 0.8 percent higher at $35.96 a barrel after trading between $34.80 and $36.05.
NYMEX July gasoline settled up 2.35 cents or 2 percent at $1.2014 a gallon. It rose as high as $1.2050 on buy stops above $1.20 and its session low was $1.1605.
“The market is up on the ChevronTexaco cat-racking problem,” said Ed Silliere, energy market analyst at Energy Merchant in New York.
After last week’s sharp losses, however, the contract is still well below its contract high of $1.3810 and the record of $1.47 hit by the June contract on May 20.
Meanwhile, NYMEX announced it would close its markets, including those offered on its electronic platforms, on Friday in observance of the national day of mourning for former President Ronald Reagan who died on Saturday.
A two-minute moment of silence was observed at 11:00 a.m. EDT (1500 GMT) today in memory of the departed president.
NYMEX said it will hold a five-minute end-of-week post-close trading session on Thursday instead of the two-minute session normally held on Mondays through Thursdays.
The Energy Information Administration will release its inventory report for the week to June 4 at 10:30 a.m. on Wednesday, the usual time, a spokesman said.
The EIA will stick to the same schedule next week, despite federal offices being shut on Friday to observe the national day of mourning for Reagan, the spokesman said.
NYMEX gasoline rose amid talk that a fluid catalytic cracking unit at the ChevronTexaco refinery in Pascagoula, Mississippi, was down. Company officials refused to comment on the issue, saying it was a market-related matter.
The refinery has a crude distillation capacity of about 350,000 barrels per day and a cat-cracking cap of about 70,000 bpd.
Despite the recent price retreat, analysts say crude futures are still overvalued. Before last week’s fund-led sell-off, market watchers had said prices were about $8 to $10 above what they considered fundamental value, with the premium attributed to oil security concerns.
Last Thursday, OPEC agreed to raise output quotas and a U.S. government oil inventory report showed commercial crude supplies 2.8 million barrels higher.
Traders said the OPEC decision may not add barrels to the market because of existing overproduction. But Saudi Arabia and the United Arab Emirates have pledged to add more than 1 million bpd in June of extra output.
Weekend attacks on Iraqi security forces and the shooting of two BBC journalists in Saudi Arabia underscored traders’ concerns over the security of supply from the region, however, and is giving a firm underpinning to the market, according to analysts.
Following crude’s cue, NYMEX July heating oil settled up 0.69 cent or 0.7 percent at 98.92 cents a gallon after trading between 97.00 and 99.50 cents.