Oil rises as gasoline supplies fall By MADLEN READ, AP Business Writer
1 hour, 57 minutes ago
NEW YORK - Oil prices rose above $60 a barrel Wednesday, as traders assessed declines in U.S. gasoline and diesel fuel inventories and the possibility of further OPEC production cuts.
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U.S. crude inventories rose last week by 400,000 barrels to 334.7 million barrels, but gasoline inventories fell by 600,000 barrels to 204 million barrels, the U.S. Energy Information Administration said Wednesday.
Also, distillate fuel inventories fell by 2.7 million barrels to 138.6 million barrels, the EIA said. Distillates include heating oil and diesel fuel; heating oil inventories rose slightly last week, but were offset by a huge 10 percent decline in diesel inventories.
Refineries' production decreased slightly last week to 88.1 percent, the EIA said.
"This is not a radically shocking set of data. However ... it shows somewhat smaller inventory surpluses than what we've seen in recent weeks," said Tim Evans, an energy analyst at Citigroup Global Markets. He added that the increase in crude was smaller than usual for this time of year, and the gasoline and distillate decreases were larger than usual.
U.S. oil supplies are still ample — above the average for this time of year. But oil prices remain buoyed by some OPEC ministers saying another production cut may be in order, strong demand and weather forecasters predicting a colder-than-normal winter in some parts of the United States.
Light, sweet crude for December delivery gained $1.20 to $60.16 a barrel in midday trading on the New York Mercantile Exchange.
Heating oil futures rose 4.12 cents to $1.7215 a gallon on the Nymex, where unleaded gasoline futures rose 4.79 cents to $1.5720 a gallon. Natural gas futures gained 8 cents to $7.83 per 1,000 cubic feet.
The market is considering whether the Organization of Petroleum Exporting Countries would make additional production cuts in December following a plan to reduce oil output by 1.2 million barrels a day starting Nov. 1. Since the announcement in mid-October, analysts and traders have questioned how many of the 11 OPEC members will deliver on the cuts they've promised.
"In general, the market remains skeptical of the entire OPEC production cuts story ... The market has struggled to stop declining," said Evans, pointing out that prices have barely risen since OPEC's output reduction announcement.
"But in time, the market will be convinced that the production cuts do matter," Evans added, noting that demand could outpace supply for the first few months of 2007.
Qatar's oil minister, Abdullah Al-Attiyah, said Wednesday he is confident that all OPEC members will comply with their recent pact to cut oil supplies.
Speaking to reporters at the end of a Gulf Cooperation Council oil ministers meeting in Abu Dhabi, Attiyah said, "We have to believe it, and we will check in the Abuja meeting. They have promised to obey and respect the resolution."
Asked if he was concerned that Nigeria has made no concrete efforts to cut oil supplies, Attiyah said, "What I have been informed from my own sources is they have already asked the oil producers there to cut production."
OPEC President Edmund Daukoru, also Nigeria's oil minister, said this week that low prices may encourage the oil cartel to further cut its output, but it doesn't have a specific price floor or band that it wants to defend. The group would discuss production at a December meeting in Abuja.
Oil prices have tumbled from a July high above $78 a barrel, trading in a range of around $57-$61 a barrel over the past month.
On Monday, Kuwaiti Energy Minister Sheik Ali Al Jarrah Al Sabah told reporters at the Abu Dhabi meeting that OPEC's Nov. 1 production cut had stabilized the market, and that further cuts might not be necessary. But Saudi Arabia's Oil Minister Ali Naimi reiterated that another cut was likely.
The long-term global outlook points to growing energy needs, with the International Energy Agency saying that governments around the globe must substantially increase their investment in the infrastructure that carries energy supplies to prevent a global shortage by 2030.
In its 2006 World Energy Outlook, the IEA said Tuesday that global energy needs will surge 53 percent by 2030, with more than 70 percent of that increase coming from developing countries, led by China and India.
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