Crude oil prices jump up thanks to increased supplies

Crude oil futures went up due to an increase in supplies at the Nymex delivery terminal in Cushing, Oklahoma, which is closely watched by traders as a benchmark of oil inventory tightness.

Anemic growth in demand and a jump in refinery activity also weighed on prices, which have dropped sharply in recent days on concerns about the economy and expectations supplies will grow.

"The report ... added to the bearish sentiment in the market," said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. "It comes at a period in time when OPEC is boosting production ... and considering another increase in production."

Light, sweet crude for January delivery plunged $2.64 to $91.78 a barrel on the New York Mercantile Exchange. Oil futures fell more than $3 a barrel on Tuesday, and are more than $7 below the record price of $99.29 set last week.

Several Organization of Petroleum Exporting Countries officials in recent days have said the cartel is willing to boost output to bring prices down.

Demand for gasoline continues to rise, but at an anemic rate, analysts say. Gasoline demand rose last week by 134,000 barrels, and is up 0.4 percent over the last four weeks compared to the same period last year, the Energy Department's Energy Information Administration said in its weekly inventory report. That's well below the historic average year-over-year growth rate of 1.5 percent, analysts say.

"There's just more and more evidence every week that we're already seeing ... demand deterioration due to high prices," said Jim Ritterbusch, president of Ritterbusch & Associates, in Galena, Illinois.

Overall demand for petroleum products fell by 487,000 barrels last week.

As demand for gasoline is slowing, supplies are rising. Gasoline inventories jumped last week by 1.4 million barrels, more than double the 600,000 barrel increase analysts surveyed by Dow Jones Newswires had on average expected. That increase came despite a 289,000 barrel decline in gasoline imports to an average of 835,000 barrels a day.

December gasoline futures dropped 6.52 cents to $2.3078 a gallon on the Nymex Wednesday.

Overall crude supplies fell during the week ended Nov. 23 by 400,000 barrels, in line with the 500,000 barrel decrease analysts had expected. But that decline was overshadowed by a 600,000 barrel increase in Cushing crude inventories. Cushing inventories are up 13.4 percent in two weeks.

Activity at the Cushing terminal is studied closely by oil traders because it is the physical delivery point for Nymex crude. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise.

Crude supplies were also helped by imports, which rose last week by an average of 534,000 barrels a day to 10.4 barrels a day.

Prices were also pressured by a surprising jump in refinery activity last week of 2.4 percent, to 89.4 percent of capacity, much more than the 0.6 percentage point increase analysts had expected. That increase explains the unexpected jump in gasoline supplies and a surprisingly small 100,000 barrel decline in supplies of distillates, which include heating oil and diesel. Analysts had expected a 1 million barrel decline. December heating oil slid 5.85 cents to $2.5949 a gallon on the Nymex Wednesday.

"The market's been concerned about the availability of heating oil supply for the winter," Ritterbusch said.

Other energy futures also fell Wednesday. December natural gas dropped 28 cents to $7.277 per 1,000 cubic feet on the Nymex on forecasts for warmer weather in coming weeks and a view that supplies are high.

In London, January Brent crude fell $1.79 to $90.73 a barrel on the ICE Futures exchange.

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Author`s name Angela Antonova