Oil jumps on news of Nigerian strike
Oil futures surged Wednesday in a late rally driven by news that workers at Chevron Corp. facilities in Nigeria had staged a surprise strike and by a report that demand for gasoline is up.Nigeria is Africa's biggest oil producer and one of the top overseas suppliers to the United States. Oil prices often rise when Nigerian oil supplies are threatened.Chevron said production was unaffected. It was unclear how long the strike might last. Nigerian oil workers have a history of striking frequently, but returning to work quickly.Prices were also supported by a MasterCard Advisors LLC report that concluded gasoline demand rose 1.3 percentage points last week compared to the same week last year. Light, sweet crude for November delivery rose $1.04 to settle at $81.30 a barrel on the New York Mercantile Exchange. November gasoline rose 1.34 cents to settle at $2.0336 a gallon while Nymex heating oil rose 3.19 cents to settle at $2.2172 a gallon.
The news from Nigeria and MasterCard interrupted what had been a sleepy day in the Nymex energy futures pits. With little news driving prices earlier in the day, futures had alternated between gains and losses as traders debated whether Thursday's inventory report from the Energy Department's Energy Information Administration will show an increase in crude stockpiles. The report will be released a day later than normal due to Monday's Columbus Day holiday.
"The market was starving for some news," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Analysts surveyed by Dow Jones Newswires predict, on average, that crude oil inventories rose 1 million barrels during the week ended Oct. 5, while refinery use fell 0.1 percentage point to 87.4 percent of capacity.
Gasoline inventories fell by 300,000 barrels last week, the analysts predict, while distillates, which include heating oil and diesel fuel, likely declined 600,000 barrels.
However, a consensus is far from clear, with some analysts expecting crude inventories to fall dramatically. A larger debate over whether oil supplies are adequate to meet fourth quarter demand remains far from settled.
The divergent opinions have been reflected in the oil market's recent volatility and lack of clear direction. Crude prices fell more than $2 a barrel on Monday, then recovered more than $1 on Tuesday. Oil prices have not ventured out of a range between $78 and $83 a barrel for most of the last month, despite two brief forays to record trading prices above $83.
High oil futures prices have not translated to higher prices at the pump. The average national price of a gallon of gas held steady overnight at $2.765, according to AAA and the Oil Price Information Service. In part, that's because high prices have chilled demand. Gas prices are well below their May peak of $3.227 a gallon, but 50 cents higher than they were a year ago.
It was the second week in a row that MasterCard's SpendingPulse report concluded that gasoline demand had risen the previous week. Last week, however, EIA data contradicted MasterCard's report, showing that demand actually fell the previous week. The MasterCard report bases its conclusions on data from the MasterCard payments network and estimates of all other forms of payment.
The news from Nigeria and MasterCard interrupted what had been a sleepy day in the Nymex energy futures pits. With little news driving prices earlier in the day, futures had alternated between gains and losses as traders debated whether Thursday's inventory report from the Energy Department's Energy Information Administration will show an increase in crude stockpiles. The report will be released a day later than normal due to Monday's Columbus Day holiday.
"The market was starving for some news," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Analysts surveyed by Dow Jones Newswires predict, on average, that crude oil inventories rose 1 million barrels during the week ended Oct. 5, while refinery use fell 0.1 percentage point to 87.4 percent of capacity.
Gasoline inventories fell by 300,000 barrels last week, the analysts predict, while distillates, which include heating oil and diesel fuel, likely declined 600,000 barrels.
However, a consensus is far from clear, with some analysts expecting crude inventories to fall dramatically. A larger debate over whether oil supplies are adequate to meet fourth quarter demand remains far from settled.
The divergent opinions have been reflected in the oil market's recent volatility and lack of clear direction. Crude prices fell more than $2 a barrel on Monday, then recovered more than $1 on Tuesday. Oil prices have not ventured out of a range between $78 and $83 a barrel for most of the last month, despite two brief forays to record trading prices above $83.
High oil futures prices have not translated to higher prices at the pump. The average national price of a gallon of gas held steady overnight at $2.765, according to AAA and the Oil Price Information Service. In part, that's because high prices have chilled demand. Gas prices are well below their May peak of $3.227 a gallon, but 50 cents higher than they were a year ago.
It was the second week in a row that MasterCard's SpendingPulse report concluded that gasoline demand had risen the previous week. Last week, however, EIA data contradicted MasterCard's report, showing that demand actually fell the previous week. The MasterCard report bases its conclusions on data from the MasterCard payments network and estimates of all other forms of payment.
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4:09 p. m.
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