Oil prices edge up on short covering; gasoline jumps
By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices rose slightly on Wednesday as investors covered short positions after a rise in U.S. crude inventories was not as massive as many had feared, while gasoline futures jumped 4 percent after a surprise decline in inventories of the fuel.
U.S. crude stocks rose by 13.8 million barrels in the week to Feb. 3 as refineries cut output, while gasoline stocks decreased, the Energy Information Administration said.
The surge in crude stocks did not shock the market, since preliminary data from the American Petroleum Institute (API) late on Tuesday showed an even bigger increase.
"A lot of the downside was already priced in," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
"In the near term, this is going to become a technical game of price levels and where speculators are going to capitulate. If we start to get through the lows of January, that could force some speculators to retrench their position."
Hedge funds and other speculators raised their net long U.S. crude futures and options positions in the week to Jan. 31 to the highest level on record, data showed on Friday.
"The crude oil inventory build was really terrible for the market but the market does not seem to care because the products inventories were better than expected and are dragging crude oil prices up with it," said Andrew Lipow, president of Lipow Oil Associates in Houston.
Gasoline futures RBc1 settled 4.4 percent higher at $1.5527 a gallon after EIA data showed the surprise decline in inventories after five straight weeks of increases. Continued...