Crude oil futures fell below $47 a barrel yesterday as the US government's latest petroleum report showed an unexpected rise in gasoline inventories and a surprising decline in the nation's oil supply.
While the drop in crude supplies had placed some upward pressure on prices, traders said momentum was reversed by forecasts calling for warmer weather.
The benchmark crude oil contract for March delivery fell 43 cents to settle at $46.69 per barrel on the New York Mercantile Exchange. Heating oil futures declined by 1.69 cents to settle at $1.297 per gallon and gasoline futures dipped 2.1 cents to settle at $1.294.
Brent crude fell 81 cents to settle at $44.01 a barrel on the International Petroleum Exchange.
Carl Larry, an analyst at Barclays Capital in New York, described the latest US Energy Department supply report as ''neutral." He said it showed ''oil demand is still strong and that is something we're going to have to contend with as we go forward."
The Department of Energy reported yesterday that total petroleum demand in the United States has averaged 20.7 million barrels over the past four weeks, or 1.5 percent more than a year ago.
While down from their late October highs above $55 a barrel, oil futures are about 34 percent higher than a year ago.
Even though concerns about heating oil supplies have diminished since earlier this winter, the market is still tense due to the war in Iraq, soaring Chinese demand, and OPEC's apparent commitment to keeping prices high.
In its weekly report, the Energy Department said the nation's inventory of crude oil fell last week by 300,000 barrels to 295.3 million barrels, or 9 percent above year ago levels. Traders had been expecting crude supplies to grow by about 1 million barrels.
Gasoline inventories grew last week by 1.6 million barrels to 216.3 million barrels, or 4 percent above year ago levels.
The US supply of distillate fuel, which includes heating oil and diesel, shrank as expected, declining by 2.9 million barrels to 118.6 million barrels, or 5 percent below year ago levels.
In other Nymex trading, natural gas futures rose 6 cents to $6.376 per 1,000 cubic feet.