Oil Rises on Shrinking U.S. Fuel Supply
Wednesday October 18, 11:01 am ET
Oil Falls Slightly Ahead of OPEC Meeting to Decide on Possible Production Cut
WASHINGTON (AP) -- Oil prices rose Wednesday after U.S. government data showed domestic inventories of gasoline and heating oil fell sharply.
The shrinking fuel supply came as refinery activity fell and a spell of colder weather pushed up demand for home-heating fuels.
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The Organization of Petroleum Exporting Countries is scheduled to meet in Qatar on Thursday to discuss production quotas and a possible cut of 1 million barrels. The cartel's intervention would follow a 25 percent decline in oil prices since mid-July.
Light sweet crude for November delivery rose 30 cents to $59.23 a barrel on the New York Mercantile Exchange. In London, December Brent crude on the ICE Futures exchange fell 16 cents to $60.78 a barrel.
In its latest weekly report, the federal Energy Information Administration said gasoline supplies fell by 5.2 million barrels last week to 210.2 million barrels, or 6 percent above year ago levels. Supplies of distillate, which include heating oil and diesel, shrank by 4.5 million barrels to 145.4 million barrels, or 15 percent above year ago levels.
The agency said refinery activity also fell. Refiners ran their plants at an average of 86.3 percent of capacity, a decline of almost 3 percent from the week before.
Crude-oil supplies grew by 5.1 million barrels to 335.6 million barrels, or 7 percent above year ago levels.
Gasoline futures edged up to $1.4650 a gallon on the Nymex, while heating oil fell half a cent to $1.7280 a gallon. Natural gas prices fell 3 cents to $6.410 per 1,000 cubic feet.
The impact of a potential 1 million barrel a day cut by OPEC remains to be seen, with traders eager to see whether the cartel merely reduces its official output quota or reduces production from current levels.
Other major influences on prices in the months ahead will be the economy, the weather and geopolitics, most notably the West's diplomatic dispute with Iran, OPEC's No. 2 producer, over its nuclear ambitions.
