Oil prices rise after US supply report

NEW YORK—Oil prices are slightly higher yesterday following government reports that US crude stockpiles didn’t grow as much as expected last week. Benchmark crude rose by 18 cents to US$98.59 per barrel in New York. Brent crude, which is used to price foreign oil varieties, rose by 29 cents to US$116.52 per barrel in London. The Energy Information Administration reported that the United States’ crude supplies increased by 300,000 barrels last week, much less than the increase of 2.25 million barrels analysts expected. Analysts were betting that refineries would continue to replenish stockpiles as they usually do in the first few months of the year. But last week they also cut back on imports as oil and gasoline demand dropped.

The EIA said that US petroleum demand fell by 4.8 per cent to a four-week average of 18.1 million barrels per day. That’s the weakest four-week average since April 1997, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. Oil prices had risen earlier in the day, to above US$100 per barrel, following an industry survey that predicted supplies would move in the opposite direction, dropping by 4.5 million barrels. The EIA report countered that. “That took the wind out of the sails of energy commodities,” said Gene McGillian, a broker and oil analyst at Tradition Energy.

Meanwhile, doubts about Greece’s ability to follow through with spending cuts and other austerity measures necessary to avoid bankruptcy pushed the dollar higher. Oil, which is priced in dollars, tends to drop in value as the dollar rises and makes crude more expensive for investors holding foreign money. In other energy trading, heating oil fell by a penny to US$3.18 per gallon, while gasoline futures rose by about 1 cent to US$2.94 per gallon. Natural gas futures rose by a penny to US$2.48 per 1,000 cubic feet.

AP