The government reported that imports over the last two weeks are more than 10% below the prior month's average, hinting that massive OPEC cuts may finally have reached the U.S. market.
Light, sweet crude for April delivery [image-nocss] jumped 6.4%, or $2.72 to settle at $45.22 a barrel on the New York Mercantile Exchange.
Many analysts believe, however, that the uptick in prices is temporary. They say inventories are at near-record levels and the severe global economic downturn will depress prices further.
"It's still dependent on whether or not we get some sort of economic recovery," Tom Kloza, chief oil analyst at Oil Price Information Service, told AP.
Consumers and businesses have slashed spending on energy and millions of people are out of work, meaning the no longer get in a car and drive every day. The government reported Thursday that new jobless claims rose again and the number of Americans continuing to receive unemployment benefits has topped 5.1 million. The Labor Department said first-time requests for unemployment benefits jumped to 667,000 from the previous week's figure of 631,000.
And analysts are still skeptical that OPEC will stick to production cuts with the budgets of member countries under severe strain. The Organization of Petroleum Exporting Countries appears so far to have stuck to production cuts of 4.2 million barrels a day and most believe another cut of at least 1 million barrels will be announced during the next OPEC meeting on March 15.
The Abu Dhabi National Oil Co. said Thursday it would cut as much as 17% of its output on various grades of oil. Reductions of 10% to 15% were announced late January.
The report came a day after the U.S. government released data showing that gasoline demand was up 1.7%, compared with the same period last year, to an average of 9 million barrels per day.
"Year-over-year demand growth is almost back to normal," Alaron Trading analyst Flynn wrote in his daily report. "Kind of a surprise but it could be a sign that the mood of the consumer is improving a bit."
In London, Brent prices rose $2.22 to settle at $46.51 on the ICE Futures exchange.
The U.S. Energy Department on Wednesday said crude inventories rose 700,000 barrels for the week ended February 20. While inventories are still rising, that trend appears to be slowing. The market was jolted last week when the government reported inventories fell slightly. Analysts had expected another build up of 3.5 million barrels.
Retail gasoline prices have traveled in the opposite direction of oil for weeks, and Thursday was no different. Prices at the pump dropped Thursday to a national average of $1.882 per gallon, down about a penny overnight, according to auto club AAA, OPIS and Wright Express. That is s still five cents more than a month ago, but $1.27 less than a year ago.
Refiners stung first by soaring crude prices in 2008, then an unprecedented drop off in demand this year, are averaging 82.2% of capacity. That is more than 5 percentage points below the five-year average, energy analyst Stephen Schork said. "Refineries are not making gasoline and they are not importing it," he wrote Thursday. "We are going to see a steady purge in material."
That could mean recent declines in gasoline prices are short-lived. That showed up in gasoline futures Thursday, which soared more than 12%, the second straight day of strong gains. Gasoline futures rose 13.37 cents to settle at $1.3004 a gallon. Heating oil increased 5.64 cents to settle at $1.2941 a gallon.
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