News & Observer | newsobserver.com | Gas futures off on inventories report

Published: Jun 01, 2007 12:30 AM
Modified: Jun 01, 2007 03:24 AM

Gas futures off on inventories report

Retail gas prices slide again

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NEW YORK - Gasoline prices at the pump slid again Thursday, while gas futures dropped on a government report that showed inventories were up slightly more than expected.

Crude oil futures, meanwhile, rose after the Energy Department's weekly inventory report showed that oil stockpiles fell.

The nationwide average price for regular unleaded gasoline slid 0.6 of a cent to $3.19 a gallon Thursday, down from a record high of $3.23 a gallon a week ago, according to AAA and the Oil Price Information Service. Thursday's average price in the Triangle was $3.12.

Gasoline futures and retail prices have moderated in recent days in part on a perception that domestic refining capacity is finally catching up to demand. That perception got a boost from the inventory report from the Energy Information Administration, the Energy Department's statistical arm, which showed that gasoline stockpiles increased by 1.3 million barrels, or 0.7 percent, to 198 million barrels last week, slightly besting analyst expectations.

Gas futures for June delivery oscillated between positive and negative territory soon after the report's 10:30 a.m. EDT release but fell 2.13 cents to settle at $2.25 on the New York Mercantile Exchange. Also on the Nymex, light, sweet crude for July delivery rose 52 cents to settle at $64.01 a barrel, though the contract had traded lower for much of the day.

The report showed oil inventories fell by 0.6 percent. The report also showed that domestic oil refineries ran at 91.1 percent of their total production capacity on average for the week ending May 25, unchanged from the previous week.

Gas prices at the pump and in futures markets have risen this spring on concerns that refineries simply are not producing enough to meet peak summer demand. Those concerns have been exacerbated by a higher than normal spate of unexpected refinery outages.

Gasoline production has rebounded in recent weeks, but some analysts are concerned that the inventory increases have not been big enough. That has led to a split among analysts, with some speculating prices could head even higher over the next month, while others conclude prices have peaked.

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