Oil prices eases with an increase in national crude and gasoline stocks
( 2001-05-24 10:36 ) (7 )

Oil prices eased a little on Wednesday after weekly US inventory data showed an increase in national crude and gasoline stocks.

London Brent blend closed 12 cents lower at $29.24 a barrel after the session was ended one hour early due to a system problem on the International Petroleum Exchange. US light crude ended 42 cents down at $29.58 a barrel.

The American Petroleum Institute said US crude inventories rose by just over two million barrels in the week to May 18 to 326 million barrels, putting tanks 21 million barrels ahead of last year as hefty imports added to existing storage.

The API said that gasoline stocks rose 1.28 million barrels. It was the seventh consecutive weekly rise for US gasoline inventories and leaves them some 1.8 million barrels above levels at the same time last year.

But while overall gasoline stocks grew, supplies of the anti-smog reformulated gasoline, required at a third of the nation's pumps, declined by almost 1.2 million barrels, or eight percent below a year ago.

Thin gasoline supplies ahead of the busy US summer driving season pushed gasoline futures prices to record highs in late April at more than $1.16 a gallon on the New York Mercantile Exchange. Gasoline on Wednesday again touched $1.16 a gallon, within a whisker of the all-time high.

To bolster gasoline supplies, US refiners have been running at high levels and hit 95.2 percent of capacity last week according to the API. That marked a 1.7 percent increase over the previous week.

Refinery glitches remain a concern, however, and have kept supply fears simmering just around the corner from the US Memorial Day holiday, which traditionally marks the start of the peak summer driving period.

Oil prices back close to $30 a barrel have left some consumers hoping for a production increase by the Organisation of Petroleum Exporting Countries. The producers' cartel will meet on June 5-6 to review exports.

However, ministers from several OPEC states have said they doubt the group will opt next month to reverse some of the 2.5 million barrels per day output cuts implemented earlier this year to shore up prices.

Prices for a basket of OPEC crudes still remain shy of the $28 threshold that the group says would trigger extra supply. The basket was priced at $27.23 Tuesday.

Traders also are keeping a close eye on Iraq.

Deputy Prime Minister Tareq Aziz said Monday that Baghdad would stop exports under the United Nations' oil-for-food deal if the United States interfered with the programme's renewal.

Iraq wants a simple renewal of the current programme while Britain and the United States want to crack down on smuggled oil under a new package of "smart" sanctions.

Another six months of oil-for-food is due for renewal on June 3.

OPEC kingpin Saudi Arabia said Tuesday that it and other OPEC members would step in an fill any serious supply gaps created by a break in Iraqi exports.