It looks as if fuel prices have found a port in the storm.
Crude-oil futures fell as much as 4 percent Wednesday with a significant climb in U.S. crude inventories . . .On the retail side, gasoline prices ticked slightly downwards the week ending October 25 and now stand at a national average of $2.032/gal. That's still 49�/gal. higher than this time last year, of course.
Crude for December delivery climbed as high as $55.65 a barrel on the New York Mercantile Exchange, an intraday level the market has never reached in the 21-year history of futures trading.
But the December contract has since dropped back to $53.80, down $1.37. It traded as low as $53, its lowest level in a week.
November heating oil fell 3.71 cents to $1.531 a gallon, and November unleaded gasoline shed 4.05 cents to trade at $1.372 a gallon.
The Energy Department reported a 4 million-barrel climb in crude inventories for the week ended Oct. 22, to a total of 283.4 million. The American Petroleum Institute posted a 4.4 million-barrel rise and pegged total stocks at 281.2 million, after an upward revision to last week's total of 900,000 barrels.
The latest climb was around double what many analysts had been expecting.
At their all-time nominal peak early in late May and early July, US retail gasoline prices hit a four-week average of $2.042/gal. Over the most recent four weeks, the price has been $2.000/gal.
While this passes for good news on the gasoline front, the heating oil situation continues to look more and more ugly. For the week ending October 22, US distillate stocks were down to just 116.6 million barrels, -9.1% from six weeks ago. For the first time since February 2003, national distillate stock levels have fallen out of the very generous "average range" and declining for six weeks when they should be rising in preparation for the winter heating season. Perhaps most worrisome, distillate stock levels in the Northeast -- the region most dependent on heating oil -- are now at the lowest end of average and will fall out of that range unless a big turnaround occurs. Release of some of the 2 million barrels currently locked up in the Northeast Heating Oil Reserve has to be on the table.
In a bold move, OPEC is actually urging the US to tap its Strategic Petroleum Reserve to bring down oil prices. The implications are considerable.
OPEC cartel president Purnomo Yusgiantoro said on Wednesday he had taken the surprise step of urging the United States to use its strategic petroleum reserve (SPR) to lower oil prices.So OPEC is so afraid of high prices that it's willing to countenance -- nay, welcome -- rivals into the market? That says a mouthful.
``We had communication with them (the U.S.). I asked them to use their reserves,'' Purnomo, also Indonesia's oil minister, told reporters. He did not say what Washington's response was.
Purnomo's request to Washington is unusual as OPEC usually regards government stockpiles as a threat to its own market influence.