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Oil Prices Rise, Gas Prices Fall on Data

Posted on: Thursday, 9 March 2006, 15:00 CST

WASHINGTON - Crude oil prices rose Thursday, riding on the back of a rally in gasoline, while natural gas prices moved in the opposite direction after government data showed an abundance of domestic supply.

Light sweet crude for April delivery on the New York Mercantile Exchange gained 48 cents to $68.50 a barrel in afternoon trading, following the upward momentum in the gasoline pit. Gasoline prices rose by more than 6 cents to $1.715 a gallon in buying some brokers attributed to short-covering, in which traders who had expected prices to be lower had to cover their bets.

Nymex natural gas futures slid by more than 10 cents to $6.54 per 1,000 cubic feet after the Energy Department said in a weekly report that domestic supplies in the lower 48 states were 54 percent higher than the five-year average for this time of year. The agency said natural-gas storage volumes declined by 85 billion cubic feet last week to 1.89 trillion cubic feet.

Heating oil gained less than a penny to $1.70 a gallon.

Edmund Daukoru, Nigeria's oil minister and president of the Organization of Petroleum Exporting Countries, said Wednesday output would remain unchanged but that the cartel would monitor it closely between now and its next meeting in Venezuela on June 1. Oil futures fell $1.56 Wednesday.

Also on Wednesday the Energy Department said crude stocks rose by 6.8 million barrels in the week ending March 3 to 335.1 million barrels - the highest level since 1999.

The increase was attributed to a rise in imports and a fall in refinery use due to seasonal maintenance, which created a back up.

But the high inventory levels in the U.S. and worldwide have not quelled a market made jittery by tensions in oil producing nations such as Iraq, Nigeria and Iran.

An increasing number of countries have come to share the U.S. view that Tehran is seeking to develop atomic weapons, but Tehran claims its nuclear program is peaceful and only aimed at generating electricity.

Tehran on Wednesday threatened the United States with "harm and pain" if it tried to use the U.N. Security Council - which has the power to impose sanctions - as a lever to punish Tehran for its nuclear program.

Iran's minister of petroleum, Sayed Kazem Vaziri Hamaneh, insisted that the Islamic republic would not cut back on or halt its oil exports.

Source: Associated Press/AP Online

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