Oil retreats on EIA report
Crude, gasoline, distillate inventories show surprisingly large rises, but crude hovers near $60.
December 7, 2005: 10:47 AM EST
NEW YORK (CNN/Money.com) - Oil prices retreated Wednesday after a government report showed that crude supplies jumped more than expected last week.
U.S. crude for January delivery was up 11 cents to $60.05 a barrel on the New York Mercantile Exchange. Just after the Energy Information Administration report was released, the contract fell below $60. Crude was up 51 cents at $60.45 just before the release.
According to the report, crude oil inventories rose 2.7 million barrels in the week ended Dec. 2, versus consensus estimates from Briefing.com for a fall of 1.9 million barrels.
Gasoline inventories rose by 2.7 barrels, more than the forecasted 1.1 million barrel rise; and distillate supplies also rose by 2.7 million barrels. Briefing.com had estimated that distillates would rise by only 1.8 million barrels.
Crude had topped $60 a barrel Tuesday, its fifth consecutive rise, as prices ticked higher on fears that a cold blast in the Northeast, the world's biggest heating oil market, could strain heating fuel supplies.
Though this week's EIA report came in far better than expected, analysts say that the full effect of this week's cold snap won't show up until next week's inventory release.
Moreover, a House subcommittee met Wednesday morning to discuss "peak oil," a theory that says the world has consumed more than half or the earth's oil and now faces the specter of depleting the supply.
International rumblings
Traders were also keeping an eye on news from overseas, unnerved by al-Qaeda's new call for militants to strike oil sites in Muslim states that pump nearly 20 percent of world supply.
"I call on mujahideen to concentrate their attacks on Muslims' stolen oil, from which most of the revenues go to the enemies of Islam while most of what they leave is seized by the thieves who rule our countries," al-Qaeda's deputy leader Ayman al-Zawahri said in a video interview on an Islamist Web site.
The al-Qaeda video comes ahead of next Monday's Organization of the Petroleum Exporting Countries meeting in Kuwait, where cartel members will map out a strategy for early next year, which will likely guide crude prices.