Oil Finishes Up Despite Higher Crude Inventory
Oil prices rose after a big drop in gasoline supplies in top fuel consumer the United States raised worries of a crunch leading into the summer driving season.
U.S. crude for May delivery settled up 36 cents or 0.6% to $59.61.
A weekly U.S. government report showed gasoline stocks fell 3.4 million barrels last week, extending a decline in inventories that has brought them more than 7% below where they were in early February.
Stockpiles of the key motor fuel have been dwindling due to low production by the nation's refineries amid seasonal maintenance and unplanned repairs, along with a slowdown in import levels from overseas, according to the U.S. Energy Information Administration.
"I'm concerned by the gasoline stocks decline," said Jason Schenker, economist at Wachovia Corporation in North Carolina. "This is really going to be critical."
Gasoline futures, which hit a seven-month high of $1.985 a gallon on Tuesday, settled down 0.72 cent or 0.4% to $1.9349 a gallon as some investors took profits, limiting crude's rally.
Light sweet crude has risen from a 20-month low of $49.90 hit in January, partly because of supply cuts by OPEC, though it is well below an all-time high of $78.40 reached last July.
Helping support energy prices was news that BP cut rates to a gasoline-making unit at its Texas City refinery, a source familiar with refinery operations said.
Besides the drop in gasoline stocks, the EIA report showed a 1.7 million barrel fall in distillates and a 4 million barrels rise in crude inventories.
The U.S. inventory data followed a report earlier today from Euroilstock showing gasoline production edged lower in Europe last month.
The Organization of the Petroleum Exporting Countries, source of more than a third of world output, agreed last week to keep current oil supply restraints in place.
OPEC oil ministers have not ruled out further action on supply before September, when they are next scheduled to hold a meeting to decide their production policy.