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Oil Closes Above $95 Amid Supply Concerns
By: Associated Press | 16 Nov 2007 | 03:46 PM ET
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Oil prices rose to close above $95 per barrel Friday, amid expectations that global crude supplies will remain tight, despite a U.S. oil inventory report that showed a surprising increase in domestic crude stockpiles.

Oil Pipeline in Germany

U.S. light, sweet crude [US@CL.1  Loading...      ()   ] for December delivery rose to settle up $1.67 at $95.10 per barrel on the Nymex. The contract expires at the end of today.

Some analysts attributed volatility in the market to the expiration of the December contract.

"Price direction should remain dominated today by the management of the expiring contract," said Olivier Jakob of Switzerland's Petromatrix.

London Brent crude futures [GB@IB.1  Loading...      ()] for January added $1.40 to $91.63 a barrel on the ICE Futures exchange.

"The outlook for pricing remains strong based on tight supply-demand fundamentals," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "Because of growth in developing countries, global oil demand growth is going to continue at a good pace."

A U.S. government report said Thursday that crude oil inventories rose by 2.8 million barrels last week. Analysts surveyed by Dow Jones Newswires, on average, had expected a decline of 300,000 barrels.

The higher inventories were "largely the result of a 830,000 barrel per day increase in imports," said Vienna's PVM Oil Associates.

Petromatrix's Jakob said the level of crude imports showed "no strong impact from the Mexican weather disruptions" of weeks past.

The U.S. Energy Information Administration's report also said gasoline supplies rose by 700,000 barrels while inventories of distillates, which include heating oil and diesel fuel, fell by 2 million barrels.

Nymex heating oil futures rose 5.31 cents to $2.6118 a gallon while gasoline prices increased 4.71 cents to $2.3833 a gallon. Natural gas futures gained 13.8 cents to $7.838 per 1,000 cubic feet.

Crude prices have been volatile this week, falling more than $3 on Tuesday and rising more than $2 on Wednesday after hitting a record of $98.62 a barrel last week. But some analysts say tight supplies and increasing demand will continue to drive prices higher.

"What's really supportive of strong pricing is that global demand growth is still exceeding supply growth, and that has eaten into the commercial inventories of consuming nations," Shum said.

Currently, oil producers are turning out about 85 million barrels a day, while the U.S. Department of Energy says consumption is between 85 million and 86 million barrels a day.

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