WASHINGTON -- Crude oil futures prices fell by more than $1 a barrel yesterday after the US government released data showing crude oil and gasoline supplies on the rise.
Light sweet crude for March delivery slipped $1.36 to settle at $66.56 a barrel on the New York Mercantile Exchange, where gasoline futures fell 7.64 cents to $1.7288 a gallon.
The market remains jittery about geopolitical tensions ranging from the West's nuclear standoff with Iran to the war in Iraq and unrest in Nigeria.
In its weekly petroleum supply report, the Department of Energy said commercial inventories of crude oil climbed last week by 1.9 million barrels to 321 million barrels, or 11 percent above year ago levels. Gasoline inventories grew by 4.2 million barrels to 219 million barrels, or roughly equal to last year's level.
The Energy Department report showed a slight decline in inventories of distillate fuels, which include diesel and heating oil. Nymex heating oil futures declined by 2.39 cents to settle at $1.824 a gallon, while natural gas futures fell 59.3 cents to close at $8.723 per 1,000 cubic feet.
Iran, the Organization of Petroleum Exporting Countries' second-largest producer, insists its nuclear program is aimed at generating electricity, but some nations fear the research could be used to create nuclear weapons.
The United States, Britain, France, China, and Russia say Iran should appear before the UN Security Council, which could impose sanctions. They have called on the International Atomic Energy Agency, the UN nuclear watchdog, to report the Iran case when it meets today.
Even though Iran has said it won't link the country's oil exports to its nuclear dispute, analysts said tensions over the issue would prevent any sharp decline in crude futures.
''We still feel that despite the Iranian oil minister's assertions, the threat of halting oil exports is a very effective bargaining chip, which is maintaining a healthy risk premium in the market," said Sucden Commodity brokers.
These supply fears arise because Nigeria's exports have been reduced because of recent violence against oil companies and as Iraqi production remains hindered by a lack of security.
Iraq exported 508 million barrels, or 1.41 million barrels a day in 2005. That was a 4.7 percent drop from 2004, when it exported 533 million barrels, or 1.48 million barrels a day.