Oil prices rise as U.S. crude supplies drop
OIL prices rose yesterday after a United States (U.S.) agency reported that supplies of crude oil and heating oil fell sharply last week, a drop that was expected to be temporary.
Crude stocks fell 7.6 million barrels in the U.S. last week, the Energy Department's Energy Information Administration reported Wednesday in its weekly inventory snapshot. The decline was five times more than the average 1.5 million barrel drop expected by analysts surveyed by Dow Jones Newswires.
Light, sweet crude for February delivery rose 67 cents to $91.91 a barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. The contract rose $1.16 overnight to settle at $91.24 a barrel after the decline in crude stocks was reported.
In London, February Brent crude futures rose 86 cents to $92.34 a barrel on the ICE Futures exchange.
Analysts said that much of the crude inventory drop was due to a sharp fall in imports, almost a million barrels a day, because fog closed the Houston Ship Channel last week.
Traders expect supplies will rebound in next week's report, reflecting crude oil deliveries delayed by the fog. Still, Vienna's PVM Oil Associates noted that present total U.S. stocks of crude, at about 297 million barrels, represent "the lowest point since February 2005."
The rest of the report was mixed. Heating oil supplies dropped 2.1 million barrels last week, more than the expected 500,000 barrel decline - a development PVM said was "supported by a snow storm that swept through the East coast last week." Gasoline inventories, meanwhile, jumped 3 million barrels, more than four times the 700,000-barrel increase analysts had forecast.
Crude stocks at the closely watched Nymex delivery terminal in Cushing, Oklahoma, rose by about 100,000 barrels last week to 17.4 million barrels - an increase that pressured prices. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise, as they have for several weeks.
Oil prices have fallen from a record high near $100 a barrel as OPEC boosted production and several forecasters lowered their predictions about how fast demand for oil and gasoline is growing.
Concerns that a slowing U.S. economy might reduce demand for oil have also weighed on prices.
Heating oil futures spiked by more than three cents to $2.6282 a gallon (3.8 liters) and gasoline rose by over two cents to fetch 2.353 a gallon. Natural gas lost two cents, selling for $7.159 per 1,000 cubic feet.
