Oil to near $68 despite high inventories

U.S. oil inventories rose last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 2.8 million barrels while analysts had expected a jump of 2.1 million barrels.

By PABLO GORONDI
The Associated Press

9/30/2009

Strengthening stock markets in Europe helped push oil prices to near $68 a barrel Wednesday despite data showing U.S. crude inventories rose for a third week, suggesting consumer demand remains weak.

By midday in Europe, benchmark crude for November delivery was up $1.08 at $67.79 in electronic trading on the New York Mercantile Exchange. The contract fell 13 cents to settle at $66.71 on Tuesday.

Major European stock indexes were all higher, boosted by improving German unemployment figures and a more optimistic forecast by the International Monetary Fund about the pace of the global economic recovery.

Gains by the euro and the British pound against the dollar also supported prices for commodities like oil and gold, which are quoted in the U.S. currency and become cheaper when the dollar falls.

Still, concerns about energy demand remained, as a report again showed rising stockpiles of crude and petroleum products.

U.S. oil inventories rose last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 2.8 million barrels while analysts had expected a jump of 2.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Information Administration’s report on inventory figures, to be released later Wednesday, is expected to be “similarly bearish,” said JBC Energy in Vienna.

“There’s no doubt that we still have very high levels of inventories, and that’s probably going to prevent oil from breaking above $75,” said Christoffer Moltke-Leth, head of sales trading at Saxo Capital Markets in Singapore.

Oil has traded between $65 and $75 for months as investors weigh the strength of a global recovery from recession. Crude bounced off the $65 level earlier this week.

“The support we saw at $65 was quite significant,” Moltke-Leth said. “The hope for recovery is still pretty strong, and that’s what’s holding prices up.”

In other Nymex trading, gasoline for October delivery rose 3.68 cents to $1.6649 a gallon, and heating oil advanced 0.64 cent to $1.7070 a gallon. Natural gas recovered 1.1 cents to $4.886 per 1,000 cubic feet.

In London, Brent crude rose 96 cents to $66.45 the ICE Futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.

Dorothy Cox of The Trucker staff can be reached for comment at dlcox@thetrucker.com.