Oil Prices Retreat After Record High

Prices Settle Below $100 A Barrel On Drop In Crude Supplies

(AP)  Oil futures retreated from a new record over $100 a barrel set Thursday after the government reported a larger-than-expected decline in crude oil inventories and an unexpected increase in heating oil supplies.

One day after oil prices briefly touched $100 for the first time, the Energy Department's Energy Information Administration said crude inventories fell by 4 million barrels last week, much more than the 1.7 million barrel decline analysts surveyed by Dow Jones Newswires, on average, had expected.

On the other hand, inventories of distillates, which include heating oil and diesel fuel, rose by 600,000 barrels, countering analyst expectations that distillate supplies would fall by 600,000 barrels. And supplies of gasoline rose by 1.9 million barrels, more than the 1.3 million-barrel increase analysts had expected.

The report ultimately pulled prices lower by showing that critical heating oil supplies and refinery activity are growing more than expected.

Light, sweet crude for February delivery fell 44 cents to settle at $99.18 a barrel on the New York Mercantile Exchange after earlier rising to $100.09, a trading record.

"Any surprises (in the report) are more the result of false expectations as opposed to anything truly remarkable in the data," said Tim Evans, an analyst at Citigroup Inc. in New York, who added that crude inventories often fall this time of year, while distillate and gasoline supplies typically increase.

February gasoline fell 2.75 cents to settle at $2.5414 a gallon on the Nymex, and February heating oil fell 2.13 cents to settle at $2.7191 a gallon. Both contracts set new trading records Thursday.

February natural gas fell 17.6 cents to settle at $7.674 per 1,000 cubic feet.

In London, February Brent crude fell 24 cents to settle at $97.60 a barrel on the ICE Futures exchange.

At the pump, meanwhile, gas prices rose 0.3 cent overnight to a national average of $3.052 a gallon, according to AAA and the Oil Price Information Service. Retail gas prices have rebounded in recent weeks, following oil's lead.

Crude's move to $100 a barrel prompted Indonesian officials to announce plans to ask OPEC to boost output to bring down oil prices, Dow Jones reported. While that may be tempting to some Organization of Petroleum Exporting Countries members, many analysts think high prices will themselves do the trick by cutting demand.

"It is unlikely the cartel will decide to increase output quotas ahead of the normally low-demand second quarter," said Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Conn., in a research note. "Furthermore, the U.S. economy is slowing, the result of which is likely to be lower demand for oil."

Indeed, there are already signs demand is slowing. Gasoline demand fell last week by 160,000 barrels, and rose only 0.1 percent over the last four weeks compared to the same period last year. Analysts consider year-over-year demand growth of under 1.5 percent to be tepid.

Also in its weekly report, the EIA said crude supplies at the closely-watched Nymex delivery terminal in Cushing, Okla., were unchanged last week at 17.5 million barrels. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise.

Refinery activity rose by 1.3 percent last week to 89.4 percent of capacity. Analysts had expected refinery use to increase by 0.4 percentage point.

Crude imports rose last week by an average of 204,000 barrels a day to 10 million barrels a day. Gasoline imports rose 136,000 barrels a day to an average of 1.2 million barrels a day.

Prices have been volatile in recent days due to low holiday week trading volumes. That means some of the price moves, including Thursday's record, may be exaggerated.

"We're still in a little bit of a holiday trading lull," said Evans, who noted that volumes on Wednesday — when oil first reached $100 — were about 72 percent of normal.

[huanaco]

JOLLY GOOD SHOW MR. BUSH, YOUR PLANNING AND THE PHONY WAR ON IRAK ARE PAYING OFF. GENTLEMEN, JUST CHECK HOW MUCH THE BARREL OF CRUDE OIL COST AT THE BEGUINNING OF THE WAR.WHO IS GETTING THE BIG PAY OFF, JUST GUESS, THE SAUDIS.

[king77shaw]

what you''re not being told is that the US dollar''s devaluation is also playing into the price of oil - heavily .. just look at the price of gold - also at record highs .. best to dump your greenbacks for gold, silver or foreign currencies ..

[arthall33]

The problem is that a few intelligent people in this world have figured out that the trillions of dollars we have printed the last few years arent worth the paper they are printed on...all we need to do is to get these people to again believe in the fairytale economical system we have and everything will be fine,,,,for awhile...or elect a person who who will get us back to sound money....

[underdogus]

WHITE HOUSE gives darker ECONOMIC forecast housing slump,tight credit spur predictions growth will dip, unemployment to rise. CNN reports

[underdogus]

dumping sorry...

[underdogus]

IF foreigners start duming the US DOLLAR, it would plummet and that would raise PRICES for everything and create a GREAT INFLATION

[underdogus]

It may not be a bad time to restock your cupboards and check your water supplies.....

[underdogus]

GAS prices expected to RISE amid RECORD OIL PRICES, RRECCESSIONNNN!!!!! that''s right ARIZONA!!!

[underdogus]

Mexico has always been that f*cked up and they havent built the fence yet.Posted by NameVerified not like the US NOW 2008 hello!!!THE WORLD TRADE CENTER has been hauled off for scrap, the constitution is in tatters, your civil rights in ruins, and YOUR NATION is off FIGHTING a HOLY WAR!!!are ya kidding me MEXICO IS F UCK ???????

[denn034]

If this affects the gas prices, then, the American people that''re already stretched thin by gas prices will need serious relief. Perhaps, we need to consider a reduction in payroll taxes as well as a national flat tax to let people keep more of their money.