Oil prices spike as gas supplies dip

09-Nov-06

Light sweet crude for December delivery rose by almost one dollar to settle at US$59.83 a barrel Wednesday on the New York Mercantile Exchange and Brent crude on London's ICE Futures exchange settled higher at US$59.59 a barrel. This decline was a the impact of traders assessment of declining U.S. supplies of gasoline and diesel fuel, coupled with the possibility of further OPEC production cuts; an impending cold winter and the feeling that the newly empowered Democrats will not be shaking up the oil industry anytime soon. Though U.S. crude inventories recorded a rise last week by 400,000 barrels to 334.7 million barrels, gasoline inventories fell by 600,000 barrels to 204 million barrels. Distillate fuel inventories, include heating oil and diesel fuel, fell by 2.7 million barrels to 138.6 million barrels, as per the EIA. Heating oil inventories rose slightly last week, but were offset by a 10% decline in diesel inventories. Refineries' production decreased slightly last week to 88.1%.