News on stockpiles eases oil price

OIL eased yesterday after data showed US petrol stockpiles had not drained as much as expected after Hurricane Katrina, but dealers feared the worst was yet to come.

US light crude was off 12 cents at $64.25 a barrel during the day, after earlier dropping more than $1 to $63.10. The market has fallen 9% from a record $70.85 last week, after industrialised nations began to tap emergency reserves.

London Brent crude was off 16 cents at $62.73.

But bearish effects of the US inventory data may be hurt as still scarce petrol supplies and a relatively optimistic global economic outlook encourage buying.

Petrol stocks fell by 4.3 million barrels over the week, nearly two million less than analysts expected, according to the first US government oil data after Katrina ripped apart the country’s refining hub.

Distillates were off 800,000 barrels versus expectations of 2.6m. Crude stocks dropped 6.4m barrels, within expectations.

Refiners have until today to submit bids for 30 million barrels of crude oil offered from the US government Strategic Petroleum Reserve (SPR).

This is half of a co-ordinated release of two million barrels per day for 30 days (in emergency stocks) by the International Energy Agency (IEA). Only a fifth of that is sought-after petrol, which does little to address the US supply crunch.

“We believe that this plan will not, in itself, be sufficient to return the market to pre-Katrina levels,” said SG Commodities.

But the IEA said it could extend the plan if a US petrol supply shortage lasted longer than expected.

Some 900,000 barrels per day of US refining capacity may still be unavailable at the end of September. Four refineries may remain inoperable for months.

Katrina shut down most of US production in the Gulf of Mexico, stopped offloading of imports at the only port that can handle supertankers, and curtailed output at nearly two dozen refineries.

Three of eight refineries completely shut by Katrina are back in operation.