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Oil stockpiles rise

Globe and Mail Update

Oil prices continued to ease Thursday after a weekly report showed U.S. stockpiles of crude rose, calming fears about lower supplies from Nigeria. Gasoline and heating oil prices, however, edged higher after stockpiles disappointed investors.

The Energy Department said Thursday that light, sweet crude inventories climbed by 1.1 million barrels to 326.7 million in the week ended Feb. 17. Analysts were expecting a buildup of 1.2 million barrels, according to a poll by Bloomberg.

U.S. crude oil inventories “remain well above the upper end of the average range for this time of year,” the report said.

Light, sweet crude for April delivery dipped 47 cents (U.S.) to $60.54 a barrel on the New York Mercantile Exchange after the report. Futures fell below $60 last week but remain 20 per cent higher than at this time last year. Crude reached a record high of $70.85 on Aug. 30.

The report, generally released on Wednesday, was issued a day later than usual because of the Presidents' Day holiday in the U.S. Monday.

The government data also showed that gasoline stockpiles climbed by 100,000 barrels to 225.6 million while inventories of distillate fuel, a category that includes heating oil and diesel, dropped 1.3 million barrels to 135.6 million barrels.

Analysts were looking for a 1 million barrel build in gasoline stocks and a 1 million barrel drop in distillate supplies.

Gasoline futures in New York added 3.89 cents to close at $1.5134 per gallon, while heating oil futures rose 1.05 cent to settle at $1.6626 a gallon. Natural gas futures climbed 17.5 cents to $7.458 per 1,000 cubic feet.

The agency's report said that gasoline demand over the past four weeks was 2.3 per cent higher than during the same period a year ago — a sign that higher prices were not slowing down motorists. Across the U.S., the average pump price for regular unleaded is $2.24 a gallon — an increase of 33.5 cents from a year earlier.

Both gasoline and distillate stockpiles are “above the upper end of the average range for this time of year,” the department said.

Despite the healthy stockpiles, some analysts said the concerns about Iran and militant attacks in Nigeria would continue to support crude prices. Nigeria is Africa's leading oil exporter and the United States' fifth-largest supplier, usually exporting 2.5 million barrels daily.

Attacks on the energy infrastructure in Nigeria have lower production by 455,000 barrels a day.

Oil prices spiked earlier this week on news that militants in Nigeria attacked a pipeline switching station, operated by Royal Dutch Shell PLC, on Monday and a boat they claimed housed Nigerian military personnel. That, and an earlier attack, has forced Shell to halt the flow of about 455,000 barrels a day.

Traders also remain concerned over the situations in Iran and Ecuador, through Ecuador's military and Napo province officials brokered a truce early Thursday, bringing a temporary end to violent protests that have interrupted the flow of crude in the nation's two main oil pipelines.

With files from The Associated Press.

© The Globe and Mail

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