Oil futures prices rose more than $1 a barrel in volatile trading yesterday after a government report showed a sharp rise in US crude supplies and tightening inventories of heating oil.
While the presidential election generated market speculation about which direction oil prices were headed, traders said yesterday they were more focused on existing market conditions.
Oil production in the Gulf of Mexico is recovering seven weeks after Hurricane Ivan pounded the region and traders anticipate a boost in heating oil output before the month is up. But uncertainty about international oil supplies persists:
The chief executive of Russian oil giant Yukos said the company is ''close to insolvency."
Iraqi oil officials said exports from the north could suffer for 10 days as a result of an attack on a key pipeline.
And, in Nigeria, a strike scheduled for this month is a potential threat to the country's oil exports.
Moreover, after a sharp move lower in the past week, traders said there was a growing consensus that perhaps prices fell too far, too fast. The report of a reduced rate of production at a refinery in St. Croix, US Virgin Islands, also pushed energy prices higher yesterday, traders said.
Light crude for December delivery traded as low as $48.65 per barrel on the New York Mercantile Exchange shortly after the Energy Department released its weekly petroleum supply report, then reversed course, rising $1.26 to $50.88 per barrel.
In London, Brent crude for December delivery jumped $1.01 to $47.56 per barrel on the International Petroleum Exchange.
December heating oil futures climbed 3.16 cents to $1.4238 per gallon on Nymex, where gasoline futures rose by 4 cents to $1.3277 per gallon. Natural gas for December delivery edged 18.5 cents higher to $8.752 per 1,000 cubic feet.
Nevertheless, a steady rise in US oil supplies and a growing sense among traders that refiners will be able to produce enough heating oil this winter has pushed crude futures roughly 8 percent lower since the record Nymex closing price of $55.17 per barrel, set Oct. 22 and again on Oct. 26.