SINGAPORE, (AP) – Oil prices rose Thursday in Asian trading to hover near $63 a barrel after jumping nearly $2 overnight amid concerns OPEC will cut production if futures prices fell too low.
Analysts said trading was thin, and many market participants were having difficulty finding an explanation for Wednesday’s surge, which came despite figures that showed higher-than-expected increases in gasoline and distillate inventories in the U.S. Energy Department’s weekly data.
“The rise was too strong if it was purely technical. There’s no factor to boost prices above $63 a barrel,” said Yoshihiko Inoo, an analyst with brokerage Tokyo Comwealth Inc.
Light, sweet crude for November delivery added 6 cents to $63.02 a barrel in electronic trading on the New York Mercantile Exchange, midmorning in Singapore. The contract settled Wednesday at $62.96 on the New York Mercantile Exchange, a gain of $1.95 for the day.
November Brent crude on London’s ICE Futures exchange fell 11 cents to $62.10 a barrel.
Natural gas futures plunged 7 percent Wednesday to their lowest level since December 2002, which analysts said was a reflection that demand for the fuel was waning even as storage levels reached a record high.
U.S. inventories of natural gas are high due to last year’s mild winter, and prices are under additional pressure because of receding fears about possible hurricane-related supply disruptions in the Gulf of Mexico. Nymex natural gas futures settled Wednesday at $4.201 per 1,000 cubic feet, the lowest close since Dec. 3, 2002.
Traders are cautious because some OPEC members have raised the prospect of trimming the cartel’s output. Oil futures are down 20 percent since hitting an intraday record of $78.40 a barrel on July 14.
It already appears that the recent plunge in U.S. retail gasoline prices has prompted some U.S. refiners to cut back on their production of motor fuels, and some analysts believe Saudi Arabia and Kuwait are contemplating unofficial cuts to their production.
Also keeping a floor underneath oil prices in the near-term are traders’ expectations that winter demand for home heating fuel will kick in before long.
A weekly U.S. Energy Department petroleum supply snapshot showed Wednesday U.S. inventories of crude oil fell by 100,000 barrels to 324.8 million barrels, or 5 percent more than last year.
The Energy Information Administration, the department’s statistical arm, said domestic inventories of gasoline increased by 6.3 million barrels last week to 213.9 million barrels, or 9 percent above year ago levels.
Inventories of distillate grew by 2.6 million barrels to 151.3 million barrels, or 15 percent above year ago levels.
In other Nymex trading, heating oil prices fell 0.29 cent to $1.7112 a gallon after settling in the previous session at $1.7141 a gallon, up 5.63 cents. Gasoline futures closed Wednesday at $1.5399 after rising 4.81 cents.