Oil wavers on mixed supply report
Government report shows crude inventories rose but gasoline stocks tumbled in latest week.
NEW YORK (CNNMoney.com) -- Oil prices seesawed Wednesday after a government report showed a larger-than-expected increase in crude supplies and a sharp drop in gasoline supplies.
Light, sweet crude for May delivery rose 22 cents to $101.20 a barrel on the New York Mercantile Exchange. Oil prices had risen immediately after the report's release.
In its weekly inventory report, the Energy Information Administration said crude stocks rose by 7.4 million barrels in the latest week. Analysts had been expecting an increase of 2.3 million barrels, according to a Dow Jones poll.
However, the report also said that gasoline supplies fell by 4.5 million barrels. Analysts had only expected a drop of 2 million barrels.
Oil prices initially rallied following the report's release as traders focused on the gasoline supply decrease.
The refineries that produce gasoline are taking longer than expected to bring supplies online for the summer season, and fuel production is "lower than it should be", said Andrew Lebow, a broker with MF Global.
Distillates, used to make heating oil and diesel fuel, fell by 1.6 million barrels, about in line with the expected drop of 1.7 million barrels.
The drop in gas stocks comes as gas prices have soared. The average price of a gallon of regular unleaded rose overnight to match its record high, according to a AAA survey on Wednesday. Average diesel prices hit an all-time high last month.
"If you put [the crude supply increase] in context with [gas] demand, it's really a bearish number," said Phil Flynn, senior market analyst with Alaron Trading.
Over the past four weeks, demand for gasoline remained flat compared to the same period a year earlier, while demand for distillates fell by 1.3%, according to the EIA.
Because demand is lacking, refineries have little incentive to refine crude into fuel, said Flynn. "Demand is just not here right now," he said, citing the slowing economy.
Federal Reserve Chairman Ben Bernanke said Wednesday that a "recession is possible" for the U.S. economy. That may further temper demand.
During the week ended March 28, refinery input rose by about 72,000 barrels a day, the EIA said. Gasoline production increased by 69,000 barrels a day, while distillate production remained relatively unchanged. 
