WASHINGTON – Oil prices rose above $57 a barrel Wednesday after the U.S. government released data that showed gasoline demand over the past four weeks was up slightly compared with a year ago, undermining the earlier belief that motor fuel consumption was tapering off because of high prices.
Also supporting the market, brokers said, were forecasts calling for much lower temperatures in the coming week in the U.S. Northeast, a major consuming market for heating oil and natural gas.
"The gasoline demand destruction that people talked about was way overhyped," said oil broker Andrew Lebow of Man Financial Inc. in New York.
Still, Lebow believes the market is still in the midst of a broader downtrend and that Wednesday's rally could be a short-term technical move stemming from the fact that "the market's gotten walloped in the last couple of weeks."
Indeed, the advance came after crude futures had already slipped to a four-month low on warmer-than-usual fall weather in the U.S. that has sapped demand for home-heating fuels.
Light sweet crude for December delivery rose 52 cents to $57.50 a barrel on the New York Mercantile Exchange. On Tuesday, the front-month crude contract settled at $56.98 a barrel, the lowest settlement price since the $56.50 closing price on June 30.
The Energy Department said in its weekly report that average daily demand for gasoline in the U.S. over the past four weeks was 9.106 million barrels per day, up marginally from a year ago. Average daily demand for distillate, which includes diesel, was also up slightly from a year ago during the same period.
The domestic inventories of crude oil fell by 2.2 million barrels last week to 321.4 million barrels. That's 12 percent above year ago levels, the agency said. Gasoline inventories declined by 900,000 barrels last week to 200.2 million barrels, leaving them 3 percent below year ago levels. The supply of distillate, which includes heating oil and diesel, grew by 2.6 million barrels to 123.4 million barrels, or 3 percent above year ago levels.
In London, December Brent crude rose 32 cents to $55.50 a barrel on the ICE Futures exchange.
Gasoline futures rose more than 2 cents to $1.48 per gallon, while heating oil rose marginally to $1.6831 a gallon. Natural gas rose 41.7 cents to $11.98 per 1,000 cubic feet.
Also on Wednesday, the Organization of Petroleum Exporting Countries said in its monthly report that the world's appetite for crude would grow next year to 84.8 million barrels a day. It was a slight increase over previous forecasts. It attributed the trend to resurgent Chinese demand and continued economic growth of key economies.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox