Oil and gasoline prices advanced Thursday after seesawing on a government report that surprised traders with bearish inventory data and bullish refinery utilization rates.
"We actually had larger than expected increases both in crude and (refined) products," which include gasoline, said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill.
At the same time, he added, "refinery runs failed to increase as much as ... the industry thought."
But renewed violence in Nigeria overshadowed the government data, analysts said.
Light, sweet crude for August delivery had wavered between gains and losses but settled higher for the day. Prices had risen as high as $72.35 earlier on concerns about renewed violence in Nigeria.
August gasoline futures also traded on either side of unchanged before rising on the day.
August Brent crude pulled off the highs of the day.
Nymex heating oil futures also rose.
At the pump, gas prices held steady overnight at $2.949 a gallon, but were 0.4 cent lower than the national average price on Tuesday, ahead of the July 4th holiday, according to AAA and the Oil Price Information Service. Retail prices peaked at $3.227 a gallon in May.
In its report, the Energy Department's Energy Information Administration said gasoline inventories rose 1.8 million barrels in the week ended June 29. Analysts surveyed by Dow Jones Newswires on average expected the report to show a 700,000 barrel increase. Crude oil inventories, which were expected to fall 500,000 barrels last week, instead rose 3.1 million barrels.
Refinery utilization rose by 0.6 percentage point to 90 percent. But analysts had expected a 1.1 percentage point increase. Inventories of distillates, which include heating oil and diesel fuel, rose 1.2 million barrels. Analysts had expected a 200,000 barrel decline.
Much of the increase in oil and gas inventories was due to higher imports, analysts said. Crude oil imports averaged 10.8 million barrels a day last week, up 277,000 barrels a day from the previous week. And gasoline imports averaged almost 1.4 million barrels per day last week, up about 280,000 barrels from a week earlier.
"Those are both very huge numbers," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
The picture that emerges from the data seems to be of a refining industry that continues to struggle to produce enough gasoline and is being bailed out by foreign imports, analysts said.
Gas and oil prices have rallied in recent months on concerns the U.S. refining industry is not keeping pace with consumer demand for gas. The spring saw an unusual number of refinery outages, stoking those concerns. And despite high gas prices, demand continues to grow.
While oil inventories have risen behind a bottleneck of temporarily shuttered refineries, gasoline supplies have fallen. Prices of both have jumped, as oil has traded higher in sympathy with gasoline futures, analysts say.
Increases in both gasoline and oil inventories generally would be seen as bearish news, sending prices sharply lower. But futures prices were supported by the refinery utilization numbers, Flynn said. Refiners have reported a number of outages this week, which means overall refinery runs aren't likely to increase anytime soon.
"The refinery runs were still disappointing," Flynn said. "Refinery runs most likely aren't going up this week."
Floodwaters kept a refinery in Coffeyville, Kan., out of commission, and problems have been reported with equipment at a ConocoPhillips refinery in Borger, Texas; a Flint Hills Resources LP facility in Corpus Christi, Texas, and an Exxon Mobil Corp. refinery in Beaumont, Texas.
New violence in Nigeria also supported prices, analysts said. Gunmen on Wednesday attacked a Royal Dutch Shell PLC oil rig in Nigeria's southern oil heartland and seized five foreign workers. Shell said no production was lost. The attack came as a Nigerian opposition group threatened to end a one-month truce in its attacks against the government and the nation's oil industry.
"It looks like the cease-fire is over," said Flynn.
On Thursday, kidnappers snatched a 3-year-old British girl as she was being taken to school in Nigeria's lawless southern oil region, officials said.
Nigeria is Africa's biggest oil producer and one of the top overseas suppliers to the United States