Crude Oil Inventories Down 1.9% in U.S.

More bad news for anyone with a gas tank to fill: U.S. crude oil inventories fell more than expected last week as imports plunged to a two-year low, the American Petroleum Institute said Tuesday.

The inventory decline of 6.2 million barrels, or 1.9%, reported by the Washington-based industry group was the largest in five months. It came at a time when U.S. refiners need to boost production of gasoline for the summer, when driving demand peaks.

“It will be difficult for refiners to ramp up production of gasoline” if imports stay so low, said Phil Flynn, senior market analyst at Alaron Trading Corp. in Chicago.

Gasoline prices have surged in recent weeks as major oil exporters have kept a lid on production while demand has risen with the reviving economy.

The current average national price of $1.342 for a gallon of self-serve regular grade is the highest since early October, though down 6cents from a year ago, according to the Energy Information Administration’s weekly survey of more than 800 service stations.

The most expensive gasoline is on the West Coast, where the average price for a gallon of self-serve regular was $1.478 in the latest survey, the EIA said.

Analysts said crude oil imports fell last week in part because heavy fog in the Houston Ship Channel kept tankers away.

Those cargoes are in the pipeline, but other factors also may limit imports. For one, Iraqi oil exports have been running well below normal levels in recent weeks because Iraq is again in a dispute with the United Nations over the country’s U.N.-supervised export program, analysts said.

U.S. crude oil imports fell 13% to 7.38 million barrels a day last week, the lowest rate since the week ended Jan. 28.

On the plus side, more refineries should be coming back on stream soon as winter maintenance downtime ends, experts said. If enough crude arrives, refineries would be in better shape to process it.

Gasoline prices will probably go higher but should fall short of the record $1.70 a gallon reached in May, said the EIA’s acting director, Mary Hutzler.

Earlier this month, the agency predicted that gasoline prices would rise 20 cents by June to an average $1.33 a gallon.

But gas costs increased by that much in three weeks, instead of the expected three months, and are already above the predicted average pump price.

Crude oil futures in New York gained 37 cents to $25.36 a barrel Tuesday in regular trading before the oil inventory data were reported.

In after-hours trading the price rose to $25.78 a barrel, the highest since September. The price was $19.84 at the start of the year.