Oil Prices Inch Back Above $60 a Barrel

By GEORGE JAHN

VIENNA, Austria – Oil prices crept back above $60 a barrel Wednesday as traders awaited the release of a weekly U.S. fuel supply snapshot expected to show higher crude stocks.

With supplies plentiful and heating oil demand down, prices were expected to remain steady despite continuing concerns about Iran, OPEC’s No. 2 producer.

Light, sweet crude rose 47 cents to $60.04 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. The contract slipped below $60 a barrel for the first time this year on Tuesday, when it lost $1.67 to settle at $59.57 a barrel.

Brent crude futures rose 35 cents to $59.87 on the ICE Futures exchange in London.

Gasoline rose more than 4 cents to $1.4250 and heating oil futures gained more than 2 cents to $1.6325 a gallon.

On Tuesday, gasoline settled at $1.3849 a gallon, the lowest front-month closing price since Feb. 22, 2005, and heating oil fell to late-July levels, closing at $1.6100 a gallon. Natural gas was up nearly 18 cents at $7.292 per 1,000 cubic feet.

The Organization of Petroleum Exporting Countries also forecast Wednesday that crude oil demand will grow at a slower pace this year as uncertainties remain over economic growth in the U.S. and Asia.

In its monthly market report, OPEC trimmed 2006 global oil demand to 84.64 million barrels a day and slightly lowered its demand growth forecast for the year to 1.57 million barrels a day.

“Oil consumption is expected to rise in all major regions…however, the uncertainties surrounding demand growth, particularly in North America and Asia, could result in a downward revision,” the report said.

Analysts said market participants had turned their attention away from geopolitical tensions and were concentrating on rising supplies.

Traders anticipated the U.S. Energy Department’s weekly petroleum supply snapshot, due later Wednesday, would likely show climbing oil stocks for the seventh straight week. Already, the nation’s commercial inventory of crude oil is nearly 11 percent above year-ago levels.

“The market is focused on the fact that the market is well supplied – both in products and in crude – while the Iranian situation stays in the background,” said energy analyst Victor Shum with Purvin & Gertz in Singapore.

Iran said Tuesday it has resumed small-scale enrichment of uranium – a defiant declaration in the face of global opposition to Iran’s atomic program.

But the resumption still leaves the second-largest oil producer in the Organization of Petroleum Exporting Countries a long way from large-scale enrichment of uranium – a process that can produce fuel for an atomic bomb. And although Iran’s file is now before the Security Council, any action there that could exacerbate tensions is still weeks or longer away.

Throughout January, traders largely ignored hefty increases in petroleum inventories amid deepening worries over Iran’s nuclear ambitions and a surge in interest in commodities from investors.

“But worrying about geopolitical events is the stuff of January not February,” said analyst Phil Flynn of Alaron Trading Corp. in a research note. “February seems to be a month that is focused on large energy supply but little concern with the world around us.”

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Associated Press Writer Gillian Wong in Singapore contributed to this report.