Oil Rises


Crude oil rose more than $1 a barrel after the U.S. Energy Department reported an unexpected decline in gasoline inventories.

Supplies of the fuel fell 3.53 million barrels to 213.6 million barrels in the week ended July 25, the department said today in its weekly report. Stockpiles were forecast to rise 350,000 barrels, according to a Bloomberg News survey of analysts. Crude-oil supplies fell less than forecast.

Crude oil for September delivery rose $1.06, or 0.9 percent, to $123.25 a barrel at 10:58 a.m. on the New York Mercantile Exchange. Futures touched $120.42 a barrel yesterday, the lowest since May 6. Prices are up 60 percent from a year ago.

Oil traded at $121.11 a barrel before the release of the report at 10:35 a.m. in Washington.

U.S. fuel consumption averaged 20.2 million barrels a day in the past four weeks, down 2.4 percent from a year earlier, the department said.

Gasoline for August delivery rose 4.57 cents, or 1.5 percent, to $3.0534 a gallon in New York. Prices touched $2.9801 yesterday, the lowest since May 5. Futures reached a record $3.631 a gallon on July 11.

Pump prices are following changes in futures. Regular gasoline, averaged nationwide, fell 1.5 cents to $3.926 a gallon, AAA, the nation's largest motorist organization, said on its Web site. Prices reached a record $4.114 a gallon on July 17.

Falling Nigerian output is also supporting prices. Nigeria is now producing less than 1 million barrels of crude a day because of attacks by militants, ThisDay reported, citing an unidentified energy ministry official. Nigeria was the fourth- biggest source of U.S. oil imports during the first five months of the year, according to the U.S. Energy Department.

Prior to the escalation of militant attacks that began in February 2006, Nigeria pumped as much as 2.6 million barrels a day, the paper said. The country was Africa's biggest oil producer until April when it was surpassed by Angola.

Iranian Supreme Leader Ayatollah Ali Khamenei said his country will push forward with its nuclear program. The Persian Gulf country's highest authority spoke before a deadline for Iran to reply to an offer from world powers of economic and diplomatic incentives in exchange for the suspension of its uranium- enrichment activities.

Iran has said it may blockade the Strait of Hormuz, the shipping lane for a fifth of the world's crude, if its nuclear facilities are attacked. The country has the second-biggest proved oil reserves and is the second-biggest producer in the Organization of Petroleum Exporting Countries.

Concern that the dispute over Iran's nuclear program might disrupt shipments from the country has supported prices since January 2006.

Brent crude oil for September settlement rose 43 cents, or 0.4 percent, to $123.14 a barrel on London's ICE Futures Europe exchange.

 


TradingEconomics.com, Bloomberg
7/30/2008 1:32:17 PM