NEW YORK – Oil prices slid Thursday, a day after the U.S. government reported that the nation's crude stocks swelled last week to their highest level in eight years.
Gasoline prices also fell as traders took profits from a run-up a day earlier. But the drop was small, and analysts say gasoline futures may rebound in coming days because U.S. supplies are relatively tight, and peak summer demand is approaching.
Many analysts are predicting that crude futures will soon surpass their trading record of $70.85 a barrel, reached Aug. 30 after Hurricane Katrina struck the Gulf coast.
As the summer approaches, not only are refineries still undergoing seasonal maintenance and recovering from last fall's hurricanes, they are also struggling with the prospect of tight ethanol supplies.
Light, sweet crude for May delivery on the New York Mercantile Exchange fell 12 cents to $68.50 a barrel in midday trading. The contract lost 36 cents Wednesday.
June Brent crude futures on London's ICE Futures exchange shed 41 cents to $69.45 a barrel.
Gasoline futures declined more than a cent to $2.0790 a gallon, after rising 3.67 cents on Wednesday.
Heating oil fell less than a penny to $1.9690 a gallon Thursday.
Still, crude futures are more than $1 higher than their settlement price last Friday, and are near all-time highs.
"We are very overbought," said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York. "We could be in for at least some kind of correction."
He noted, though, that "we're still in a bullish uptrend," due to underlying support from various supply concerns — the disruption of Nigerian crude supplies by rebels, the possibility of Iranian oil exports being halted due to political tension, and on the domestic side, refineries having trouble turning enough crude into gasoline to meet consumers' needs.
Ethanol is increasingly being blended with gasoline as refiners phase out their use of additive MTBE, which contaminates drinking water. The refiners have said they will stop using MTBE on May 5, when the federal requirement for a clean-air oxygenate is lifted as part of an energy law enacted last summer.
Inventories of crude oil rose in the past week to their highest level since early 1998, the U.S. Energy Department reported Wednesday. It was the third straight weekly build in crude stocks.
Petroleum products continued to shrink, as refineries were operating at only 85.6 percent. Gasoline stocks fell 3.9 million barrels last week to 207.9 million barrels, and distillates — which include diesel and heating oil — fell 4.6 million barrels to 117.4 million barrels.
Meanwhile Thursday, natural gas rose about 18 cents to $6.990 per 1,000 cubic feet, after the U.S. Department of Energy reported that natural gas inventories grew by 19 billion cubic feet in the week ending April 7 to 1.7 trillion cubic feet — a bit less than most analysts had expected.