Oil Prices Rise on Pending Supply Report
George Jahn

VIENNA, Austria (AP) — Oil prices rose Tuesday amid expectations that a midweek U.S. government report will show crude stockpiles fell for a fifth straight week.

Wednesday's report by the U.S. Energy Department's Energy Information Administration for the week ended Dec. 14 will show U.S. crude supplies fell 1.3 million barrels, according to the averaged forecasts of nine analysts polled by Dow Jones Newswires.

Vienna's PVM Oil Associates noted that — if the forecasts prove accurate — levels would still be "slightly above the 5-year average ... (but) some 20 million barrels below figures from the past two years."

Light, sweet crude for January delivery rose 67 cents to $91.30 a barrel by midday in European electronic trading on the New York Mercantile Exchange. In London, Brent crude futures added 14 cents to $91.43 a barrel on the ICE Futures exchange.

Brent crude added 25 cents to fetch $91.53 on London's ICE futures exchange.

The analysts also expect the EIA report to show distillate inventories, which include heating oil and diesel fuel, fell about 300,000 barrels while gasoline stockpiles are expected to rise 700,000 barrels.
The Nymex crude contract fell 64 cents Monday to settle at $90.63 a barrel on concern that a slowing U.S. economy may weaken crude demand.

Despite Tuesday's upward trend, many analysts believe the market's sentiment has changed from bullish to negative amid a number of reports that oil demand and economic growth are weakening. Friday's U.S. government report that consumer inflation jumped in November by the largest amount in more than two years continues to weigh on markets.

An OPEC official's comment that the cartel may boost output also helped ease prices Monday.

"I would not exclude the possibility of increasing production if the market wants it," said Chakib Khelil, Algeria's oil minister, who takes over as president of the Organization of Petroleum Exporting Countries on Jan. 1.

Still, Khelil, who spoke to reporters at a Mediterranean energy conference in Cyprus, also said current oil supplies are sufficient.

PVM said that the 10 OPEC nations under production ceilings are now pumping around 27.63 million barrels a day, almost 580,000 barrels a day more than in November and over 400,000 barrels above the overall OPEC daily quota.

"The higher supply is mainly the result of the ... (United Arab Emirates) production returning back to normal levels after heavy maintenance in November," it said.

While oil prices rose slightly last week, they remain nearly $10 a barrel below November's record highs.

Heating oil futures added over a penny to $2.6103 a gallon (3.8 liters) while gasoline prices rose 0.69 of a cent to $2.335 a gallon. Natural gas futures gained a cent to $7.045 per 1,000 cubic feet.

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