Oil prices slide after inventory report | VailDaily.com

Oil prices slide after inventory report

NEW YORK – Oil prices turned lower Wednesday after a government report showed the nation’s crude oil inventories are growing even as demand for some fuels continues inching forward.Crude futures had rebounded from five-month lows earlier this week as a storm approaching the northeastern states stoked expectations for greater heating-oil use in the region, the world’s largest market for that distillate.Traders are waiting to see how demand will respond to the storm, but the Energy Department said Wednesday that heating oil stockpiles grew 2.4 percent last week and are almost 10 percent above year-ago levels. Distillate production was also 0.2 percent higher last week, matching the rise in demand over the past four weeks.The department also reported crude oil reserves expanded 0.1 percent from the week before, standing at 321.8 million barrels. Those inventories are well above the upper end of the average range for this time of year, the report said.Oil prices began falling in electronic trading after the report was released. A barrel of light, sweet crude for January delivery lost 14 cents to $58.70 on the New York Mercantile Exchange.The January Brent contract on London’s ICE Futures exchange also dropped 83 cents to $55.55 a barrel.Other Nymex prices were lower, with heating oil down 3.3 cents at $1.763 per gallon and gasoline off 1.6 cents at $1.533 a gallon.Meanwhile, natural gas reversed earlier losses at midday, when the department said stockpiles fell slightly to 3.27 billion cubic feet last week. Natural gas gained 3.1 cents to $12.09 per 1,000 cubic feet on the Nymex.With winter weather starting to blanket the United States, demand continues to be a key focus for the oil market. Limited refining capacity following hurricanes Katrina and Rita sparked fears of shortages this winter, and analysts have been mixed on whether distillate supplies are sufficient for the heating season.”As of right now, inventories appear to be adequate,” said Tom Bentz, an analyst at BNP Paribas Commodity Futures in New York. “But a lot will depend on how cold a winter we have.”Bentz said that with energy demand holding steady, Wednesday’s retreat might be a temporary pullback as prices trend higher in the short term. The analyst added that crude oil could reach $60 or $62 a barrel soon.The Energy Department’s report for the last two weeks has showed that gasoline demand is back to normal, said Credit Suisse First Boston analysts in London.Over the past four weeks, demand for gas averaged 0.8 percent more while supplies grew 0.1 percent last week, the Department said. But overall demand for petroleum products – averaging 20.5 million barrels a day – is still 1.6 percent below 2004 levels.Forecasters say a cold front will bring a mix of rain and snow stretching from North Carolina to Maine heading into the busy Thanksgiving weekend. Analysts say heating oil demand will be linked to how low temperatures fall.”The U.S. National Weather Service forecast heating oil demand to rise 7 percent above normal this week as colder-than-normal temperatures hit the U.S. Northeast, making it the first week in four that heating oil demand is higher than average and ending the mild start to the heating oil demand season,” said analysts at Sucden Commodity brokers in London.Vail, Colorado

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