Oil prices flucutate on supply drop explanation
AP , New York: May 29 2008
Made Popular May 29 2008

Oil prices fluctuated Thursday after the Energy Department reported sharp and unexpected declines in crude oil and gasoline supplies last week, but said the drop in crude inventories was due to temporary delays in unloading oil tankers along the Gulf Coast.

Retail gas prices, meanwhile, rose to a new record above $3.95 a gallon.

In its weekly inventory report, the department’s Energy Information Administration said crude oil inventories fell by 8.8 million barrels last week, while gasoline supplies fell by 3.2 million barrels. Analysts surveyed by energy research firm Platts had expected slight increases in supplies of both.

But the EIA also offered a rare explanatory note on the Gulf Coast tanker problems. Gulf ports have closed many times in recent months due to fog, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

“This is the worst year I can remember for fog,” Flynn said.

Also putting some weight on prices were supplies of distillates, including heating oil and diesel fuel, which rose by 1.6 million barrels last week, double what analysts had expected.

Light, sweet crude for July delivery rose 5 cents to $131.08 a barrel on the New York Mercantile Exchange. Prices were more than $2 lower in morning trading before the EIA report was issued, but shot up by more than $2 a barrel immediately after the report’s release.

At the pump, meanwhile, the average national price of a gallon of gas rose 0.8 cent Thursday to a record $3.952, according to a survey of stations by AAA and the Oil Price Information Service. Analysts and the Energy Department forecast that prices will rise above the psychologically important $4 level soon, on a national basis. Prices are already that high in many parts of the country, and are averaging more than $4 in 11 states and the District of Columbia.

Diesel prices are also soaring. The national average price of a gallon of diesel fuel rose 0.9 cent Thursday to a record national average of $4.787. Diesel prices are above $5 a gallon in some areas.

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