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Oil Prices Rise After Sliding Nearly US$3 A Barrel
POSTED: 10:42 a.m. EDT, April 11,2007

Oil prices regained some ground yesterday after sliding nearly US$3 a barrel the day before on expectations of oversupply at a key North American delivery point.

Light, sweet crude for May delivery rose 38 cents to settle at US$61.89 on the New York Mercantile Exchange. May Brent at London's ICE Futures exchange also rose 57 cents to finish at US$67.42 a barrel, The Associated Press reported.

"We're seeing a bit of bargain hunting come into the market today," said Tim Evans, an energy analyst with Citigroup Global Markets. "Also, the physical demand for heating oil is up on the unusually cold weather."

Below-normal temperatures continue to grip the northeastern and central United States, with some areas expecting snow, according to local forecasts. The weather also helped to push up prices for heating oil and natural gas yesterday.

Natural gas rose 32.3 cents to US$7.874 per 1,000 cubic feet, while heating oil futures gained 4.04 cents to settle at US$1.8561 a gallon.

The small gains follow Monday's plunge of US$2.77 to US$61.51 a barrel on news of an oversupply at a key North American delivery point in Cushing, Oklahoma. But the market's softness is only temporary, according to Phil Flynn, an energy analyst at Alaron Trading Corp in Chicago.

"The weakness is still in the front month contract because supplies seem pretty high in the short term," Flynn said. "But as we go out a few months, the spreads are getting pretty wide."

The June contract finished at US$64.88 a barrel, up 57 cents, while the July contract settled up 55 cents at US$66.67.

Flynn expects refineries to plow through the backlog of supply as soon as they return to full strength, while US imports will dwindle this year as more supplies are directed to Europe because of higher prices there.

Rising tensions with Iran also remain supportive of prices. Iran announced Monday that it has begun enriching uranium on an industrial scale. President Mahmoud Ahmadinejad said the country was now capable of enriching nuclear fuel using 3,000 centrifuges. Some experts said the announced capabilities would fall far short of the material needed to run the plant.

The claim comes days after Iran defused another crisis with the West by releasing 15 British sailors and marines it had held for 13 days for allegedly entering its waters. Oil prices rose more than US$5 a barrel -- hitting six-month highs -- after that March 23 detention.

Traders are also looking ahead to today's inventory report from the Energy Department.

Analysts surveyed by Dow Jones Newswires expect gasoline inventories to have dropped by an average of 1.3 million barrels last week from the previous week. Analysts are also calling for a 900,000 barrel decline in distillate stockpiles -- which include diesel fuel and heating oil -- and a build of 1.6 million barrels in crude oil supplies.

In other trading, gasoline futures settled at US$2.1230 a gallon, up 2.84 cents.

From:crienglish
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