Crude Prices Drop As U.S. Fuel Supplies Keep Rising MARKETPLACE By Bloomberg
Posted on: Thursday, 26 January 2006, 18:00 CST
By Mark Shenk
Crude oil prices fell more than $1 a barrel on Wednesday after an Energy Department report showed that U.S. supplies of gasoline and distillate fuel had increased for a fourth straight week. Inventories of distillate fuels, which include heating oil and diesel, rose 1.8 million barrels last week, to 136.5 million barrels, a two-year high.
A gain of 788,000 barrels had been expected.
The same report showed that gasoline inventories jumped 3.1 million barrels, to 214.8 million. Refineries operated at 86.2 percent of capacity, their lowest in two months. "Supplies are ample across the board," said Kyle Cooper at Citigroup in Houston. "We were able to increase product supplies even with refineries running at around 86 percent, which isn't a good sign for the bulls. We don't have much storage left." Crude oil for March delivery fell $1.21 to $65.85 a barrel at 4 p.m. on the New York Mercantile Exchange. Oil is up 32 percent from a year ago. Prices reached a record $70.85 a barrel on Aug. 30, the day after Hurricane Katrina made landfall, slashing output at platforms in the Gulf of Mexico. Natural gas prices fell amid news of sufficient supplies and temperate weather that has lessened demand for home heating fuel. Mild weather has reduced the need for utilities and storage companies to tap stored reserves. Natural gas for February delivery dropped 22.2 cents to $8.46 per million British thermal units at 4 p.m. on the New York Mercantile Exchange. The price is down 24 percent this year.
Gold prices rose on speculation that a weaker dollar would increase its appeal as an alternative investment.
Gold sold in dollars has climbed 8.7 percent this year as the euro has gained 3.5 percent against the U.S. currency. A weaker dollar will keep fueling the rally, said Wayne Murdy, chief executive of Newmont Mining, the world's largest producer.
Gold for February delivery rose $4.40 to $562.50 an ounce on the New York Mercantile Exchange. Gold reached $568.50 last Friday, the highest level in 25 years.
Source: International Herald Tribune
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