Oil Prices Hit 3-Month Low at $58.93

By MADLEN READ

Oil prices hit 3-month low at $58.93

NEW YORK Oil prices fell Wednesday to their lowest level in more than three months, settling below $59 a barrel after the U.S. government said supplies of oil and gasoline rose.

The market is still probing the downside, said oil broker Tom Benz of BNP Parries Commodity Futures in New York.

Warmer-than-usual weather in the U.S. Northeast and Midwest in recent days has helped to bring prices down from late August highs of more than $70 a barrel, and Benz said crude futures could fall to the $55 a barrel level. However, the first cold spell could put a stop to the downward momentum, he said.

Light sweet crude futures for December delivery declined by 78 cents to settle at $58.93 a barrel on the New York Mercantile Exchange. It was the lowest close since the front-month contract settled at $58.65 on July 22.

Gasoline futures fell by 1.1 cent to close at $1.5513 a gallon, while heating oil futures rose by 1.11 cent to $1.7896 a gallon.

In its weekly supply report, the federal Energy Information Administration said crude-oil inventories rose 4.5 million barrels to 323.6 million barrels in the week ended Nov. 4 from a week earlier. Crude stocks are about 13 percent higher than they were a year ago.

Gasoline inventories rose by 4.2 million barrels to 201.1 million barrels nearly 2 percent lower than year-ago levels, but now in the upper half of the average range for this time of year.

U.S. inventories of distillate fuel, which includes diesel and heating oil, slipped by 100,000 barrels to 120.8 million barrels. They are 2 percent higher than a year ago, but in the lower half of the average range for this time of year.

Wednesdays report also suggested that U.S. demand for gasoline is still below last years levels, but catching up motor gasoline demand averaged 9.1 million barrels a day last week, just 0.4 percent below the same period last year. Meanwhile, distillate fuel demand in the last week surpassed year-ago levels, averaging 4.1 million barrels a day, or 0.4 percent more than a year ago.

The question on oil traders minds now is whether heating-oil supplies, after dropping for seven straight weeks, can catch up with growing demand going into the winter.

It could actually get cold, and it could change the momentum of this entire market in the next couple weeks. Heating oil supplies are falling at a time when they should be building, said Phil Fly, analyst at Aaron Trading Corp. in Chicago. He added that a blast of cold weather could cause oil prices across the board to surge, perhaps even pushing crude back toward the $70-a-barrel level.