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Oil Prices Up Despite Supply Report Data

Posted on: Thursday, 3 November 2005, 09:00 CST

By GEORGE JAHN

VIENNA, Austria - Crude-oil prices rose above $60 a barrel Thursday after the U.S. government released data that showed rising supplies of oil and gasoline, but hinted that gasoline demand could soon rise.

Analysts said that relatively mild temperatures in the U.S. Northeast and recovering refinery capacities could weigh on prices over the short term.

Light, sweet crude for December delivery gained 70 cents to $60.45 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. Heating oil gained more than 3 cents to $1.8180 a gallon, while gasoline was up more than 2 cents to $1.5950.

Natural gas was up nearly 8 cents to fetch $11.680 per 1,000 cubic feet.

December Brent crude futures on London's ICE Futures exchange - formerly the International Petroleum Exchange - rose 74 cents to $59.12 a barrel.

In its weekly petroleum supply report, the U.S. Energy Information Administration said Wednesday that U.S. crude inventories rose by 2.7 million barrels last week to 319.1 million barrels, or 12 percent above year-ago levels. Gasoline inventories grew by 1 million barrels to 196.9 million barrels, or 3 percent below year-earlier levels.

The EIA data also showed that average daily gasoline demand over the past four weeks was 1.7 percent below year-ago levels. However, the gap is narrowing because consumption has been rising week to week since the start of October.

Oil prices fell below $60 a barrel for the first time in more than three months on Monday due to warm weather in parts of the U.S. that dampened demand for home heating fuels such as natural gas and heating oil. Crude futures are about 15 percent below their Aug. 30 peak of $70.85.

"Current mild temperatures in the U.S. Northeast are melting heating oil supply worries for the time being," said PVM Oil Associates in Vienna. "With refining capacity steadily increasing ... supplies currently seem to be sufficient to cover demand in the cold months, assuming there are no further outages."

Gasoline futures are sharply below their late August peak due to the recovery of refinery operations along the Gulf coast in the aftermath of hurricanes Katrina and Rita. Only one refinery, BP PLC's 437,000-barrel-per-day plant in Texas City, Texas, remains shut. Six others in Texas and Louisiana are running at reduced rates, according to the Energy Department.

Still, analysts remain concerned that U.S. output of oil and natural gas remains constrained by hurricane-related damage to platforms and pipelines. The U.S. Minerals Management Service said Wednesday that 64 percent of daily oil production and 50 percent of natural gas production in the Gulf of Mexico remained off-line, slightly lower than Tuesday.

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Associated Press Writer Christopher Torchia in Singapore contributed to this report.

Source: Associated Press/AP Online

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