Oil Prices Slip on Rising Gas Inventories

By MADLEN READ

NEW YORK – Crude-oil prices slipped below $63 a barrel Wednesday after the U.S. government reported that crude stocks fell slightly in the last week, but gasoline inventories increased sharply.

Relatively mild winter weather in the United States contributed to the bearish sentiment Wednesday, along with the lack of major new developments on the volatile political front with Iran, the Organization of Petroleum Exporting Countries’ second-largest oil producer.

Light, sweet crude for March delivery fell 54 cents to settle at $62.55 a barrel on the New York Mercantile Exchange. The contract had fallen $2.02 on Tuesday to settle at $63.09 a barrel.

Heating oil fell more than 2 cents to settle at $1.6656, while unleaded gasoline fell more than 4 cents to settle at $1.5481 a gallon. Natural gas fell more than 12 cents to settle at $7.735 per million British thermal units.

U.S. crude stockpiles fell by 300,000 barrels in the week ending Feb. 3 to 320.7 million barrels, the U.S. Department of Energy’s Energy Information Administration said Wednesday.

Gasoline inventories rose by 4.3 million barrels to 223.3 million barrels, and stocks of distillates, which include heating oil and diesel, slipped by 300,000 barrels to 136 million barrels, the EIA said.

The draws in crude and distillates did not concern traders, as crude inventories remain nearly 11 percent higher than year-ago levels, and distillate inventories are 12 percent higher.

“Heating oil supply and demand couldn’t look more bearish … and the crude number was so insignificant, it had no effect on the market at all,” said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. “Everywhere you look, we have physical supplies, and that’s the overarching fundamental.”

The Department of Energy on Tuesday revised its forecast of global demand in the first quarter to 85 million barrels a day – 300,000 barrels a day lower than predicted a month ago. U.S. oil demand in the first quarter was revised downward by 220,000 barrels a day to 20.67 million.

“The only thing that would turn the market around is a change in the weather, on the fundamental side,” Silliere said. “On the psychological side, more sabre-rattling from Iran, or a harsh response from the U.N. security counsel, would heat things up again.”

The International Atomic Energy Agency board of governors voted Saturday to report Iran to the U.N. Security Council, which can impose sanctions, over its nuclear program. Tehran responded by saying it would start full-scale uranium enrichment and bar surprise inspections of its facilities.

Iran removed some U.N. seals from its main uranium enrichment facility in central Iran on Jan. 10 and resumed research on nuclear fuel after a 2 1/2-year freeze. It insists it only wants to generate electricity, but the United States and some of its allies contend Tehran is trying to build a weapon.

Meanwhile, a state-run oil company in Ecuador suspended operations of one of its two main oil pipelines Tuesday after some 60 protesters seized a pumping station to demand the government cancel U.S. oil company Occidental Petroleum Corp.’s contract.

Petroecuador said in a statement that the decision to suspend pipeline operations was “a measure for prevention and security.” Ecuador is the fifth-largest producer of crude oil in South America. More than half of its exports go to the United States.

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Associated Press Writers George Jahn in Vienna and Gillian Wong in Singapore contributed to this report.