Oil Futures Prices Surge on Word of Tight Supplies

Crude oil futures prices rose sharply in brisk trading Wednesday, a reaction to tight inventories reported by the American Petroleum Institute.

On the New York Mercantile Exchange, the July contract for West Texas Intermediate, the key U.S. crude, ended at $19.66 a 42-gallon barrel, up 62 cents after a 43-cent gain Tuesday. The June contract expired Monday and finished at $20.93, with a gain of 33 cents from Friday’s close.

Prices of crude oil contracts for delivery after July all posted sharp gains.

Among refined products traded on the exchange, wholesale home heating oil for delivery in June rose 2.11 cents to 49.61 cents a gallon after rising 0.52 cent on Tuesday. The June contract for unleaded gasoline rose 2.59 cents to 66.83 cents following Tuesday’s gain of 0.34 cent.

Analysts said prices rallied early on the inventory figures, which were released after the market closed on Tuesday. The API reported a 3.13-million-barrel decline in U.S. crude oil inventories in the week ended May 19, indicating high demand and usage.

Gasoline stocks fell 2.61 million barrels and heating oil inventories declined 1.58 million barrels for the week, the institute reported.

Analyst James Steel of Refco Inc. said supply reductions from the North Sea due to high winds that hindered repair work on rigs boosted the London market Wednesday and carried over to New York. He said North Sea supply was off 31% for the week ended Wednesday.

Gasoline prices were given a boost by added demand as the Memorial Day holiday weekend approaches, said Andrew Lebow, an analyst with E. D. & F. Man International Futures Inc.