Oil Prices Near $74 a Barrel

Thursday, Aug. 30, 2007 | 10:35 a.m.

Oil prices continued to climb Thursday after jumping in the previous session on unexpected declines in U.S. refinery utilization rates and crude and gasoline inventories.

Light, sweet crude for October delivery rose 36 cents to $73.87 a barrel in electronic trading on the New York Mercantile Exchange, midday in Europe. The contract rose $1.78 to settle at $73.51 a barrel Wednesday.

The crude and gasoline inventory declines in the U.S. suggest the refining industry is easing back from what had been a scramble to produce more gasoline to supply the peak summer driving season, which ends this weekend.

The U.S. Energy Department's Energy Information Administration reported that refinery utilization rates fell 1.3 percentage points to 90.3 percent of capacity in the week ended Aug. 24. Analysts surveyed by Dow Jones Newswires, on average, had expected no change.

The decline in activity helped cut gasoline inventories by 3.6 million barrels. Analysts had expected a 1.8 million barrel decline.

The EIA also reported that crude oil inventories fell 3.5 million barrels, much more than the 800,000 barrel decrease analysts expected. Distillate stocks, which include diesel and heating oil, increased 900,000 barrels, more than the 600,000 barrel increase analysts forecast.

Analysts still saw room for oil prices to continue rising in the short term.

"The $75 per barrel WTI (target) is now within reach ... and this level should be the key resistance test in a global environment which is still risk-adverse and has to consider that U.S. crude oil stocks remain above average," said Oliver Jakob of Petromatrix in Switzerland.

In London, October Brent crude advanced 28 cents to $72.41 a barrel on the ICE futures exchange.

Nymex heating oil futures added 0.43 cent to $2.0462 a gallon (3.8 liters). Gasoline prices rose 1.00 cent to $2.108 a gallon.

Natural gas futures rose 0.6 cent to $5.587 per 1,000 cubic feet.

Natural gas inventories are already at record levels, and prices are lower than they were a year ago, which could be good news this winter for people who rely on natural gas for heating.

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Associated Press Writer Gillian Wong in Singapore contributed to this report.