Oil prices rise fall as U.S. supplies shrink | VailDaily.com

Oil prices rise fall as U.S. supplies shrink

Associated Press

WASHINGTON – Oil prices rose Wednesday on concerns a blast of cold weather would drive up demand for home-heating fuels and on signs gasoline demand is rebounding as the cost at the pump drops.The U.S. government released data that showed gasoline demand over the past four weeks was up slightly compared with a year ago, reversing a trend whereby high prices appeared to be damping motor fuel consumption.Also supporting the market, brokers said, were forecasts calling for much lower temperatures in the coming week in the U.S. Northeast, a major consuming market for heating oil and natural gas.”The gasoline demand destruction that people talked about was way overhyped,” said oil broker Andrew Lebow of Man Financial Inc. in New York.Still, Lebow believes the market is still in the midst of a broader downtrend and Wednesday’s rally could be a short-term technical move stemming from the fact that “the market’s gotten walloped in the last couple of weeks.”Indeed, the advance came after crude futures had already slipped to a four-month low on warmer-than-usual fall weather in the U.S. that has sapped demand for home-heating fuels.Light sweet crude for December delivery rose 90 cents to settle at $57.88 a barrel on the New York Mercantile Exchange. On Tuesday, the front-month crude contract settled at $56.98 a barrel, the lowest settlement price since the $56.50 closing price on June 30.In addition to the supply fears stoked by the arrival of colder weather, Fimat USA oil analyst John Kilduff said the upcoming holiday-travel season “rivals the summer as far as driving demand goes” and this might also ratchet up gasoline demand in the weeks ahead.Nevertheless, Kilduff said the new weather and demand data do not appreciably alter the fact that supplies are not as thinly stretched as they were in the immediate aftermath of hurricanes Katrina and Rita.The U.S. Energy Department said in its weekly report that average daily demand for gasoline in the U.S. over the past four weeks was 9.106 million barrels per day, up marginally from a year ago. Average daily demand for distillate, which includes diesel, was also up slightly from a year ago during the same period.The domestic inventories of crude oil fell by 2.2 million barrels last week to 321.4 million barrels. That’s 12 percent above year ago levels, the agency said. Gasoline inventories declined by 900,000 barrels last week to 200.2 million barrels, leaving them 3 percent below year ago levels. The supply of distillate, which includes heating oil and diesel, grew by 2.6 million barrels to 123.4 million barrels, or 3 percent above year ago levels.In London, December Brent crude rose 32 cents to $55.50 a barrel on the ICE Futures exchange.Nymex gasoline futures rose 2.66 cents to settle at $1.4883 per gallon, while heating oil futures rose 4.83 cents to $1.7292 a gallon. Natural gas futures rose 76.6 cents to $12.329 per 1,000 cubic feet.Also on Wednesday, the Organization of Petroleum Exporting Countries said in its monthly report that the world’s appetite for crude would grow next year to 84.8 million barrels a day. It was a slight increase over previous forecasts. It attributed the trend to resurgent Chinese demand and continued economic growth of key economies.Vail, Colorado

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