Oil Futures Surpass $20 a Barrel; U.S. Stockpiles Reach Low Levels

Crude oil futures surged above $20 a barrel Wednesday as reports showed U.S. stockpiles have fallen to their lowest levels since 1977, when oil prices were doubling.

The tight stock situation already is being felt at the nation’s gas pumps and is likely to continue, said analyst Tim Evans at Pegasus Econometric Group in New York.

“We’re in a squeaky-tight stock situation,” Evans said, “and consumers are going to feel it.”

Light, sweet crude oil for April delivery rose 65 cents to $20.19, the highest price for the contract closest to delivery since Feb. 20.

The American Petroleum Institute reported late Tuesday that crude stocks fell 2.698 million barrels last week to 297.484 million--the lowest U.S. stockpile since mid-1977, when the Organization of Petroleum Exporting Countries nearly doubled the price of oil.

Most investors had expected stocks to rise 2 million barrels, and the difference toppled previous contract highs “like dominoes,” Evans said.

American oil refiners have been importing less oil this year and refining for deliveries just in time for use in a bid to cut storage costs.

The market shrugged off a report that OPEC had increased output in February by 70,000 barrels a day to average 25.78 million barrels a day. The continuing threat of 700,000 barrels a day of Iraqi oil reaching the market under a U.N.-negotiated oil-for-food plan also caused barely of flicker of concern, analysts said.