VIENNA, Austria, (AP) -Oil prices edged up Thursday as a larger-than-expected decline in gasoline inventories in the United States raised concerns about tight supplies ahead of the summer driving season.
A weekly report released Wednesday by the U.S. Energy Information Administration showed that gasoline inventories declined for the eighth straight week and that demand is still strong.
Light, sweet crude for May delivery on the New York Mercantile Exchange rose 9 cents to $64.47 a barrel in electronic trading by noon Thursday in Europe. This followed a drop of 26 cents on Wednesday as Iran announced it would free 15 detained British sailors.
“The saga of the detention by Iran of U.K. sailors and marines and their release should not, in our view, have been much more than a sideshow in terms of its implications for the oil market,” analysts at investment bank Barclays Capital, led by Paul Horsnell, said in a report.
“We would see the immediate downside as being fairly limited before the grinding nature of global fundamentals drives prices up further.”
U.S. crude oil inventories rose by 4.3 million barrels to 332.7 million barrels last week, according to the report, while gasoline inventories dropped 5 million barrels to 205.2 million barrels. The drop was much larger than the market had anticipated, and pushed gasoline inventories into the lower half of their average range for this time of year.
Inventories of distillates, which include heating oil, were unchanged at 118 million barrels.
Refineries operated at 87 percent of capacity for the second straight week.
Over the last four weeks, gasoline demand has averaged nearly 9.3 million barrels per day, the EIA said, which is 1.7 percent above the same period last year.
“The overall picture for gasoline remains very bullish, with stocks falling by over 22 million barrels in the last eight weeks,” noted Vienna’s PVM Oil Associates. “In the same time period in 2006, inventories of gasoline fell by only half this amount.”
On London’s ICE Futures, Brent crude for May rose 27 cents to $68.67 a barrel.
In other Nymex trading, heating oil futures dropped 0.38 cent to $1.8606 a gallon, while natural gas prices were essentially steady at $7.520 per 1,000 cubic feet.