Oil prices close moderately higherInventory report shows smaller- than-expected build in crude, gas supplies but decreasing demand keeps prices in check.NEW YORK (CNNMoney.com) -- Oil prices struggled for direction Wednesday after the government said supplies of crude and gasoline rose far less than expected last week. U.S. light crude for March delivery rose 49 cents to settle at $92.78 a barrel on the New York Mercantile Exchange. In its weekly inventory report, the Energy Information Administration said crude stocks rose by 1.1 million barrels last week, keeping supplies right in the middle of the average range for this time of year. Analysts were looking for a rise of 2.7 million barrels, according to a Dow Jones poll. Distillates, used to make heating oil and diesel fuel, fell by 100,000 barrels while gasoline supplies rose by 1.7 million barrels. Analysts were looking for a 1.2 million barrel decline in distillate supplies and a 1.9 million barrel rise in gasoline stockpiles. Refinery usage was slightly higher than the previous week, operating at 85.1% capacity last week. But gasoline demand continued to be low, averaging just 9 million barrels per day over the past month, though these numbers are 0.4% higher than the same period last year. "Refineries were a little stronger, but you can't hide the fact that gasoline demand has fallen off the map," said Phil Flynn, senior market analyst at Alaron Trading in Chicago. "We should see gasoline demand growing 1.5% to 2%." The lack of demand is keeping oil prices from rising significantly. The International Energy Agency's (IEA) cut its 2008 global oil demand growth forecast in its monthly oil market report. The Paris-based IEA said that the struggling U.S. economy and slower global economic activity have resulted in a decreased demand for oil worldwide. The agency cut its world crude consumption forecast by 310,000 barrels a day from its previous report in January. The IEA report echoed the U.S. Energy Department's Energy Information Administration (EIA) monthly report released Tuesday, which also said that demand for petroleum products in 2008 will be lower than previously forecasted. The EIA believes that gasoline prices will spike at $3.40 a gallon in the spring, down from its previously expected high of $3.50 a gallon. Also restraining oil prices was traders' lack of enthusiasm about a Commerce Department report about retail sales released Wednesday. The report said that said total retail sales rose 0.3%, beating the expectations of economists surveyed by Briefing.com; however, excluding both the auto and gas station sales, January retail sales were actually flat for the month. "When you strip out gas sales, you're looking at not-that-robust growth," said Flynn. Oil traders also did not pay much attention to Venezuela's threats to cut off oil to the United States. The state-run Petroleos de Venezuela SA said Tuesday it had discontinued crude sales to Exxon Mobil Corp. (XOM, Fortune 500) in response to the largest oil company's court bid to freeze billions of dollars in Venezuelan assets in a challenge to the nationalization of its Venezuelan oil ventures. Venezuelan president Hugo Chavez has also threatened to cut off all oil to the United States. "This is nothing more than a bunch of talk," said Flynn. "Venezuela will continue to sell oil to the U.S. because they have no choice." Oil prices topped $100 a barrel early this year, but have since pulled back amid fears of a recession in the United States, the world's largest economy. Oil prices have risen nearly five-fold since 2002. Most analysts blame rising demand and tight supply. That has also attracted floods of investment money, and exaggerated the effects of supply disruptions. |
|