NEW YORK – Oil prices held steady over $76 a barrel on Wednesday after a big draw in U.S. fuel stocks and the drop in Alaskan crude output added to supply concerns in the world's biggest consumer.
U.S. crude settled up 4 cents at $76.35 a barrel after trading as high as $77.40 earlier in the day. London Brent crude, which hit a new intraday high of $78.65 a barrel on Tuesday, fell 27 cents to settle at $77.28.
Visit FOXNews.com's Energy Center for complete coverage.
Strong U.S. gasoline demand helped drain domestic stocks last week, the U.S. Energy Information Administration said on Wednesday. Gasoline inventories fell 3.2 million barrels, more than the 1.1 million barrel draw analysts forecast.
"The EIA's gasoline draw is much larger than expected and together with the distillate stock decline is driving the market higher," said Phil Flynn, analyst with Alaron Trading.
Distillate stockpiles were off 200,000 barrels, while U.S. crude supplies fell 1.1 million barrels last week.
Relatively healthy global crude oil inventories have provided a cushion for disruptions, but there are signs that missing supplies may be gradually eroding that surplus.
The EIA data does not take into account the closure of Alaska's Prudhoe Bay field, which BP began shutting down on Sunday due to severe pipeline corrosion.
"The BP situation is much more important than these (EIA) numbers and an announcement by BP with more definitive information about when they will get production back up could overshadow these stats," said Jim Ritterbusch, president of Ritterbusch and Associates.
Shipping sources said BP has been scrambling to move from across the world to make up for the lost production.
SUPPLY CONCERNS
Prices had eased from record peaks on Tuesday on hope that some output from the largest U.S. oilfield, which represents 8 percent of total U.S. output, could be maintained.
BP will decide on Friday whether it will completely shut down production at Prudhoe Bay or continue to run the western half of the field, which produces 185,000 barrels per day.
Some analysts were sceptical that a limited flow from the 400,000 barrels per day (bpd) BP field could continue, given the regulatory scrutiny the company was facing and the logistical challenges in buying pipes and installing them in the harsh north.
"The politics around that decision (maintaining western production) will be interesting. We think the plan gets nixed and 400,000 bpd are out through Q1," Jan Stuart, energy economist at UBS, said in a report.
By Tuesday, half of the field's production, or some 200,000 barrels, was shut-in.
The U.S. government said Saudi Arabia and Mexico could help meet any supply shortfalls, but also warned that full production from Prudhoe Bay might not resume until January.
Oil prices have soared 25 percent this year on political tensions that are feared could affect oil supply.
These are headed by Iran's determination to pursue a nuclear programme and the war between Israel and Hizbollah, plus the actual loss of some 700,000 bpd of Nigerian production and Iraq's erratic northern exports.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox