NEW YORK--Oil futures climbed back above $80 a barrel to its highest level in a week after a government report showed U.S. oil inventories fell last week as demand rose.
Light, sweet crude for August delivery settled 85 cents, or 1.1%, higher at $80.21 a barrel on the New York Mercantile Exchange, its highest level since June 20. Brent crude on the ICE futures exchange recently rose 46 cents, or 0.5%, to $93.48 a barrel.
The Energy Information Administration said oil inventories last week fell 100,000 barrels from what had been their highest level since 1990 the previous week. The decline, though less than expected, came as demand rose and refiners boosted operations.
"You're getting some sentiment in the market that crude oil has been oversold," said Stephen Schork, editor of The Schork Report energy newsletter. "I'm not quite there. I've certainly been flirting with that idea...but we do seem to be forming a base in the high 70s now."
The EIA's figure for implied crude demand rose 2.5% last week, as demand for gasoline and diesel fuel rose.
"The biggest takeaway to me was that there was an improvement in demand, which is quite positive," said Tom Pawlicki, analyst at brokerage EOXLive in Chicago.
Prices were even higher before the report's release, with the Nymex benchmark hitting an intraday peak of $80.92 a barrel. Analysts attributed the slight pullback to expectations for an even bigger decline in oil inventories, with analysts surveyed by Dow Jones Newswires calling for a drop of 500,000 barrels.
Market participants closely watch the EIA's weekly oil inventory data for signals on supply and demand in the U.S. The recent surge in U.S. inventories comes as the sluggish economy has curbed demand in the U.S., and as domestic production continues to climb and imports stay high.
Rising inventories have helped curb oil prices in recent months. Prices have also been dented by the deepening fiscal crisis in Europe, amid fears that a broader economic crisis will weaken oil demand.
Gasoline inventories last week rose 2.1 million barrels. Stockpiles of distillates, a category that includes heating oil and diesel, fell 2.3 million barrels. Refinery utilization rose 0.7 percentage point to 92.6% of capacity.
The steep drop in gasoline stockpiles pulled futures prices lower. Front-month July reformulated gasoline blendstock, or RBOB, settled 2.47 cents, or 0.9%, lower at $2.6204 a gallon.
July heating oil settled 1.72 cents, or 0.7%, higher at $2.5937 a gallon.
Analysts had expected gasoline stockpiles to rise just 800,000 barrels. Distillate stocks were expected to rise by 900,000 barrels. Refiners were seen boosting refinery utilization 0.2 percentage point to 92.1% of capacity.
"That implies that refineries are working at relatively high levels, which should help pull down oil stocks," Mr. Pawlicki said.
Separately, an oil workers' strike in Norway also helped support prices, market observers said. The strike has shut down 240,000 barrels a day, or 15% of the country's oil production, according to the country's Oil Industry Association.
The strike was launched Sunday due to a disagreement over the workers' pension deal. About 700 oil workers on four offshore installations are on strike.
The strike comes just days ahead of the European Union's oil embargo on Iran, due to take effect July 1.
More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:
Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close
Write to Dan Strumpf at email@example.com
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