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Oil price goes up and down, ends day with 97-cent decline
WASHINGTON - The price of oil gyrated yesterday after the federal government released data that showed a growing domestic supply of gasoline and other fuels, along with rising demand.
July light sweet crude futures fell 97 cents to settle at $53.63 a barrel on the New York Mercantile Exchange, almost $2 below the intraday high of $55.40.
Oil analyst Marshall Steeves of Refco Group Inc. brokerage in New York said the energy market's psychology these days is sharply split.
A few weeks ago, prices fell below $47 a barrel on signs of slower economic growth and rising petroleum inventories worldwide. Now traders seem consumed once again by fears of potential supply tightness later in the year.
On Wednesday, oil prices surged 2.63 a barrel, or 5 percent, because of nagging nervousness that increasing oil consumption will make it difficult for producers to keep up, leaving the world vulnerable to any unexpected disruptions.
Gasoline futures declined 2.88 cents to $1.5154 a gallon yesterday on the NYMEX. In London, Brent crude settled 80 cents lower at $52.50 a barrel on the International Petroleum Exchange.
Oil prices are about 34 percent higher than they were a year ago but would need to surpass $90 a barrel to match the inflation-adjusted high set in 1980.
Over the past four weeks, demand for distillate fuel, which includes diesel, jet fuel and heating oil, has been 5 percent above year ago levels, while gasoline demand has been 1.8 percent higher, according to the Energy Department's weekly petroleum snapshot.
The agency said inventories of crude oil rose last week by 1.4 million barrels to 333.8 million barrels, 11 percent above last year's level, while gasoline inventories grew by 1.3 million barrels to 216.7 million barrels, up 6 percent.
The supply of distillate fuel, which includes heating oil, jet fuel and diesel, rose more modestly, up 700,000 barrels to 106.4 million barrels, about equal to year-ago levels.
"Distillate inventories should be building like crazy right now, but they're not," said John Kingston, director of oil at Platts, a division of McGraw-Hill Cos.
Kingston said refiners focused on cranking out gasoline to cope with drivers' summer vacation demands might find themselves rushing to boost distillate output by fall to prepare for the next home-heating season. "We're setting ourselves up for problems in winter," he said.
Heating oil futures were up less than a penny to $1.5422 per gallon yesterday, retreating from earlier highs of $1.595 per gallon. On Wednesday, heating oil futures bolted 9 cents higher on concerns about strong demand later in the year.
Sheik Ahmed Fahd Al Ahmed Al Sabah, president of the Organization of Petroleum Exporting Countries, said Wednesday that the cartel, which produces 40 percent of global crude, would maintain its production ceiling until the third quarter.
OPEC is to meet June 15 in Vienna, Austria, to discuss production levels. Al Sabah's comments are likely to rile price hawks such as Venezuela that have indicated a preference for an output cut. But analysts said the recent rise in oil prices makes an output cut unlikely.
The 11-member group is pumping about 30 million barrels daily. Global demand is expected to average more than 84 million barrels a day throughout the year.