WASHINGTON – The nation's oil supply dropped another 4.5 million barrels last week, leaving inventories the lowest since 1975 and below what the industry considers necessary for smooth operation.
The Energy Department said Wednesday crude stocks were at 269.8 million barrels, just below the lower end of an inventory range needed to assure enough oil is available for efficient refinery operation.
While inventories are low, "it doesn't necessarily mean there will be shortages. ... Refineries are still running," said Ron Panting, an economist for the American Petroleum Institute, the trade group of the major oil companies.
He said API's statistics show slightly more oil in inventory — 271.6 million barrels — than the number released Wednesday by the government's Energy Information Administration, the DOE's statistical arm.
Still, the continued decline of crude stocks — at a time when the Bush administration is preparing for possible war in Iraq — was expected to prompt renewed calls from some members of Congress for drawing on the government's emergency oil stocks in the Strategic Petroleum Reserve.
The Bush administration has resisted several such calls in recent weeks, saying that the government-held oil — more than 600 million barrels — should only be released if there are significant supply disruptions, such as might occur if fighting erupts in Iraq.
Energy Secretary Spencer Abraham told an oil conference in Houston on Tuesday the administration is confident it can address any severe oil supply disruptions that might be caused by a war with Iraq.
"While we have not made any decisions about future action, we are confident that we can quickly assess the situation and address any severe supply disruptions if needed," Abraham said.
But war worries have caused crude prices to soar in recent weeks. The price of light sweet crude rose to a 26-month high Tuesday on the New York Mercantile Exchange to $35.44 a barrel, declining only slightly Wednesday.
The inventory decline stems largely from the continued loss of crude from Venezuela because of internal political strife and refineries pumping out more gasoline. Although the Energy Department said some oil from Venezuela has begun to come into the United States again, overall oil imports declined last week from the previous week.
World oil output increased by nearly 1.2 million barrels a day in January, according to the International Energy Agency. Saudi Arabia and other OPEC producers agreed to boost production to try to make up for lost Venezuelan oil, but those supplies have not yet arrived in the United States.
Even Venezuela's production rebounded in January after a near shutdown, but oil industry experts warn that exports from that country are likely to be sporadic.
In its weekly oil summary, the Energy Department's Energy Information Administration said that gasoline inventories rose by an equivalent of 3 million barrels and are now "slightly above the low end of the normal range."