Oil Prices Gain, Products Edge Lower

By EDITH BALAZS

BUDAPEST, Hungary – Crude-oil prices rose Thursday but prices for refined products fell as the market digested a U.S. inventory report that showed shrinking crude stocks but an unexpected build in gasoline stocks.

Prices are likely to come under upward pressure, as the market is still jittery over hurricane damage in the U.S. Gulf area and a prolonged strike at a large refinery in France.

Total SA, Europe’s largest gasoline exporter to the U.S. with an output of 325,000 barrels a day, is beleaguered by a strike over pay which has brought production to a halt.

The action further increases tension in an already tight refining market.

"There is still a lot of uncertainty in the market and I expect to see big swings in prices depending on news coming out of the Gulf of Mexico," said Orrin Middleton, energy analyst at Barclays Capital in London.

"The U.S. demand and supply situation will continue to have a major impact on prices as we head into winter," he added.

Light, sweet crude for November delivery gained 15 cents to $66.50 a barrel in electronic trading on the New York Mercantile Exchange.

Gasoline fell a cent to $2.3300 a gallon, while heating oil eased half a cent to $2.1345.

In London, Brent crude futures for November delivery were up 7 cents to $64 a barrel on the International Petroleum Exchange.

The U.S. Energy Department’s Energy Information Administration said Wednesday that crude inventories fell 2.4 million barrels from the previous week to 305.7 million barrels. They are about 11 percent higher than a year ago.

Gasoline stocks rose 4.4 million barrels from the previous week to 199.8 million, but are still about 6 percent below year-ago levels, the department said. They could shrink when refiners shift their focus to heating oil in the coming months.

"The increase in gasoline supplies could partly be just the release of U.S. strategic reserves being accounted for now," said commodities analyst Mark Pervan at Daiwa Securities in Melbourne.

The department also said up to 15 percent of U.S. refinery capacity could be offline for at least the next couple of weeks.

According to data released Wednesday by the U.S. Minerals Management Service, all oil production in the U.S. Gulf remained shut down, and suspended gas output rose to 80.27 percent from 78.56 percent the day before.

The region usually produces 1.5 million barrels of crude oil a day.

In the storm-devastated U.S. Gulf area, about a dozen refineries in Texas and Louisiana have yet to restart after suffering damage and electricity outages from Hurricane Rita.

Chevron Corp. said the devastation caused by the two hurricanes is likely to be more serious than expected and estimated this tropical storm season will cost the company more than $350 million in third-quarter profit.

Exxon Mobil Corp. said late Wednesday it resumed production at some Gulf of Mexico platforms, but that the majority of suspended output remains offline.

Crude prices are expected to remain high in the upcoming months amid strong demand for distillates such as heating oil as the Northern Hemisphere winter approaches, and due to the slow-paced recovery of refineries after Hurricanes Rita and Katrina.

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Associated Press Writer Gillian Wong in Singapore contributed to this report.