Oil bounces back above $55

NEW YORK (CNNMoney.com) -- Oil prices moved into positive territory Wednesday, finishing slightly higher despite a government report that revealed a surprising jump in U.S. distillates and gasoline supplies.

U.S. light, sweet crude for March delivery settled up 33 cents to $55.37 a barrel on the New York Mercantile Exchange. Oil was trading lower for most of the session.

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Crude prices extended early losses after the Energy Information Administration (EIA) said in its weekly inventory report that crude stocks rose by 700,000 barrels last week. Analysts were looking for a build of 1.1 million barrels, according to Reuters.

Energy markets paid particularly close attention to a surprising jump in distillates inventories. Distillates, used to make heating oil and diesel fuel, climbed by 700,000 barrels, versus forecasts for a decline of 800,000.

"For the market to have a bullish reaction the inventory draws would had to have been a lot bigger than expected and we didn't get that," said Dan Lippe, president of the Houston-based consultancy Petral Worldwide.

Distillates fuel demand is down 4.1 percent from last year, according to EIA, averaging nearly 4.1 million barrels per day over the last four weeks.

Gasoline supplies also jumped, climbing by 4 million barrels and surprising markets. Analysts were looking for an increase of 1.3 million in gasoline stockpiles.

Oil prices have tumbled in recent weeks, hitting a 20-month low of $49.90 last week, hurt by warm weather in the United States, high inventories and a decision by OPEC not to hold an emergency meeting of member countries to discuss falling crude prices.

But cold weather in the northeastern United States helped crude prices rebound during Tuesday's session, pushing crude prices back above $55 a barrel. (Full story)

Stocks of oil majors, including BP (down $0.31 to $64.91, Charts), ExxonMobil (up $0.24 to $74.73, Charts), ConocoPhillips (up $0.52 to $65.49, Charts), Chevron (up $0.27 to $72.83, Charts) and Royal Dutch Shell (up $0.04 to $69.22, Charts), have mirrored oil prices recently, turning lower, while the AMEX oil and gas index is down 2.8 percent so far this year.

Even though some firms that deal in energy trading, such as Goldman Sachs (Charts), have trimmed their 2007 forecast for crude prices, many economists are still betting that oil prices will average above $60 a barrel this year.

Gasoline prices have been slow to follow crude's recent decline, but they have turned lower recently. As of Wednesday, the average U.S. retail price for a gallon of regular unleaded gasoline was $2.147, down nearly 19 cents from a month ago, according to the Automobile Association of America.

In related news, President Bush said during his State of the Union address Tuesday, that the United States should cut its gasoline consumption by 20 percent over the next decade through higher fuel standards and greater use renewable fuels such as ethanol. (Full story)

The White House also said it planned to add 11 million barrels to the country's Strategic Petroleum Reserve.

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