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Oil off its highs on supply report
Weekly inventory report shows decline in distillates, but overall supplies healthy.
By Grace Wong, staff writer

NEW YORK ( - Oil prices moved off their highs Wednesday morning after a government fuel inventory report came in close to expectations.

U.S. light sweet crude for April delivery rose 64 cents to $62.05 a barrel on the New York Mercantile Exchange. Just before the Energy Information Administration released its report, the contract was up 84 cents at $62.25.

"All in all, the report was pretty neutral. Everything pretty much was right in line with expectations," said Brian Kuzma, energy analyst RBC in Houston.

The government report showed distillates, used to make heating oil, fell by 1.5 million barrels in the week ended Feb. 24.

While that was slightly above the 1.3 million barrel decline analysts surveyed by Reuters were expecting, current supply levels are so high that small changes to inventories aren't really moving the market much, Kuzma said.

The latest EIA report showed gasoline supplies rose for the ninth straight week. Gas stockpiles posted a gain of 300,000 barrels, exceeding analysts' forecast for supplies to hold steady, and hitting their highest level since June 1999.

Crude stocks swelled by 1.6 million barrels, topping Reuters analysts' estimates of a 1.2 million barrel build.

Oil prices have gyrated over the past two weeks, swinging wildly amid growing U.S. stockpiles and supply disruption threats.

While inventories remain well above the upper end of the average range for this time of year, prices are still hovering around $62 a barrel.

"It's all geopolitical right now. People are more concerned with the long-term crude situation than short-term fundamentals," Kuzma explained.

Tension in Nigeria, where militants have attacked oil production facilities, continues to rattle traders, as do ongoing concerns about Iran's nuclear enrichment program.


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