Oil hits fresh lows as supplies swellRising heating oil, gasoline supplies offset big drop in crude; Belarus says deal is reached in pipeline dispute.NEW YORK (CNNMoney.com) -- Oil prices hit fresh 19-month lows Wednesday after the government said supplies of crude stocks sank, but distillates and gasoline inventories rose more than expected. U.S. light crude for February delivery fell $1.62 to settle at $54.02 a barrel on the New York Mercantile Exchange, falling as low as $53.80 in intraday trading, its lowest since June 2005. In its weekly inventory report, the Energy Information Administration said crude stocks sank by 5 million barrels last week. Analysts were looking for a drop of only 500,000 barrels, according to Reuters. But distillates, used to make heating oil and diesel fuel, rose by by 5.4 million barrels, while gasoline supplies added 3.8 million barrels. Analysts were looking for a 2.2 million-barrel gain in distillate supplies and a 2.6 million-barrel build in gasoline stockpiles. Ryan Davies, a trader at Titan Commodities in San Diego, said the crude numbers were a bit less of a concern than the distillate and gasoline numbers. "It really hasn't been a crude inventory problem" that's helped push up oil prices over the past couple of years, he said. "It's been a refined products problem." Oil prices have fallen roughly 10 percent since the beginning of the year, hitting a 19-month intraday low in overnight trading Monday. Warm weather, high inventories, a slowing economy and doubts over whether OPEC can deliver a meaningful production cut are largely to blame, and speculative money has poured out of the market. Davies said oil prices could slide below $50 as investment money looks for any upturn in prices as a chance to sell, but he didn't expect crude to trade much below $50 for very long. EIA said gasoline demand rose 0.8 percent over the previous four weeks compared to the same period last year, while distillate fuel demand fell 2.6 percent and jet fuel demand fell 8.8 percent. The report said gasoline and distillate supplies remain at about average levels for this time of year. Crude stocks, despite posting big drops for the past several weeks, are still higher than normal. Helping push oil prices lower earlier in the session, Belarus said it had a reached a deal with Russia that will allow oil once again to flow through a major pipeline to Germany and other countries in Central Europe, Reuters reported. Moscow has yet to confirm the deal. Between 1.2 and 1.4 million barrels a day from Russia have been shut in since the weekend after a dispute between the two countries over natural gas prices and crude oil transit fees shut down the pipeline. Stocks of oil majors, including BP (Charts), ExxonMobil (Charts), ConocoPhillips (Charts), Chevron (Charts) and Royal Dutch Shell (Charts), have followed crude prices lower, and the AMEX oil and gas index is down 6 percent so far this year. __________________ |
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