Supply concerns send oil prices higher
NEW YORK -- Crude oil prices climbed slightly yesterday after the government reported drops in crude, gasoline, and distillate fuel inventories -- aggravating concerns about a supply shortage from the shutdown of a major pipeline in Alaska.
Analysts had predicted a buildup in distillate inventories, and a smaller drop in gasoline inventories. The report also indicated that US demand for motor gasoline and distillates, which include heating oil and diesel fuel, is still going strong.
Prices also continue to be inflated by ongoing unrest in Nigeria, Africa's biggest oil producer; the standoff between the United Nations and Iran over the number two oil producer's nuclear program; and fighting in the Middle East between Israel and Hezbollah, which further threatens to disrupt production in the region.
Light, sweet crude for September delivery rose 4 cents to settle at $76.35 a barrel on the New York Mercantile Exchange, after rising as high as $77.44 -- less than a dollar away from its trading record of $78.40, reached July 14.
Nymex gasoline futures, however, dropped 5.41 cents to $2.1722 a gallon. Heating oil futures slipped 1.01 cent to $2.1063 a gallon after reaching 2.1535, and natural gas futures rose 49.3 cents to $7.651 per 1,000 cubic feet after hitting $7.94.
Analysts attributed the afternoon pullback to traders taking profits from recent jumps. The factors contributing to high prices remain, said Fimat USA analyst Mike Fitzpatrick.
As the summer driving season nears its end, traders are switching their sights toward heating oil.
Though current heating oil inventories are slightly below last year's levels, ``it's not all that spectacular, considering we had a mild winter last year," said Phil Flynn, Alaron Trading Corp. analyst.
US crude inventories fell 1.1 million barrels to 332.6 million barrels last week, the Energy Information Administration said yesterday. They are still more than 4 percent above year-ago levels. Gasoline inventories fell 3.2 million barrels to 207.7 million barrels. They are less than 1 percent above last year's levels, and in the lower half of the average range for this time of year.
BP PLC said late Sunday that it had begun shutting down 400,000 barrels of daily oil production due to corroded pipes along the Alaska pipeline. Alaska usually supplies 800,000 barrels of oil a day to West Coast refineries, the energy agency said Tuesday.
The average US retail price for a gallon of regular, unleaded gasoline was $3.035 yesterday, down from a day earlier but still close to its record high of $3.057, reached Sept. 5 in the wake of Hurricane Katrina.
