Oil prices spike by over US$1

The Department of Energy in its weekly petroleum supply report indicated a rise in inventories of crude oil last week by 1.9 million barrels to 321 million barrels, (11% above year ago levels). Gasoline inventories grew by 4.2 million barrels to 219 million barrels (almost same as last year's level). Despite U.S. government data released on Wednesday showing a rise in crude oil and gasoline supplies, crude oil futures prices rose by more than US$1 a barrel, as supply concerns abound amidst geopolitical tensions ranging from the West's nuclear standoff with Iran, the war in Iraq and terrorist unrest in Nigeria Light sweet crude for March delivery rose to US$68.80 a barrel on the New York Mercantile Exchange. The uptrend also reflects speculative buying as well as short-covering, in which traders who had expected prices to be lower by now must cover their bets.