WASHINGTON -- Oil prices rose slightly on Thursday in response to U.S. government data showing crude inventories plunged last week, reported the Associated Press.
In its latest weekly report, the U.S. Department of Energy said crude-oil inventories declined 8.1 million barrels last week to 321 million barrels, dipping below year-ago levels of 323.3 million barrels.
The shrinking supply was not a total surprise: foul weather along the Gulf Coast delayed oil shipments, forcing refiners to draw down inventories; and U.S. imports [image-nocss] have fallen by 567,000 barrels per day (bpd) in the past four weeks, in part because higher prices in Europe have attracted supplies.
But the magnitude of last week's inventory drop was larger than expected, analysts said. "This was outside the range of expectations," said Citigroup analyst Tim Evans, who believes steadily declining U.S. inventories and shrinking output from the Organization of Petroleum Exporting Countries (OPEC) will keep upward pressure on oil prices well into 2007.
Although U.S. crude oil inventories are 8% above their five-year average for this time of year, Evans noted that supplies have dwindled by 67 million barrels since early October. "At some point, it's not a one-off decline. It's a trend," Evans said.
Prices have settled lower during the past four consecutive trading sessions, closing at their lowest level in a month on Wednesday amid depressed demand for home-heating fuels.
On Thursday, light sweet crude for February delivery climbed 19 cents to close at $60.53 a barrel on the New York Mercantile Exchange (NYMEX). In London, Brent crude futures climbed 15 cents to settle at $60.67 a barrel on the ICE Futures exchange.
The nation's gasoline supply increased by 3 million barrels last week as refinery activity picked up. Inventories of unleaded stood at 203.9 million barrels, compared with 207.3 million barrels a year earlier. The U.S. supply of distillate, which includes heating oil and diesel, increased by 500,000 barrels to 133.6 million barrels, compared with 135.3 million barrels a year ago.
In other NYMEX trading, heating oil rose 1.43 cents to settle at $1.6231 a gallon, while gasoline futures declined by 0.54 cents to settle at $1.582 a gallon.
Prices slid last week as slower economic growth and expectations of a mild winter outweighed OPEC's determination to tighten up worldwide supplies.
OPEC said earlier this month that it plans to reduce output by an additional 500,000 bpd beginning in February. That comes on top of a previously announced cut of 1.2 million bpd.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.