Oil prices rose by almost $2 per barrel Wednesday after the government reported a drop in U.S. crude inventories last week, and analysts said they expect U.S. oil demand to increase as the nation recuperates from Hurricane Katrina.
Light, sweet crude for October delivery gained $1.98 to $65.09 per barrel on the New York Mercantile Exchange.
In the week ending Sept. 9, inventories of crude oil fell 6.6 million barrels to 308.4 million, according to a weekly report from the Department of Energy. Crude supplies are still about 11 percent higher than a year ago.
Gasoline inventories rose by 1.9 million barrels to 192 million, about 7 percent lower than year-ago levels. Distillate supplies, which includes heating oil, fell 1.1 million barrels to 133.3 million -- about 3 percent higher than a year ago.
The drops in crude and distillate stocks fell in line with most analysts' predictions, but the rise in gasoline stocks came as a surprise.
Gasoline rose 4.6 cents to $1.94 per gallon on the Nymex but was off its intraday high of $1.95. Heating oil gained 8.5 cents to $1.93 per gallon.
Analysts also said that the decline in the price of oil from its recent highs may cause the oil ministers of the Organization of Petroleum Exporting Countries, who meet on Monday, to maintain current quotas.
Vienna's PVM Oil Associates said the recent drop in prices that has sent crude down more than $7 below the intraday high of $70.85 reached on Aug. 30 could take the steam out of OPEC and other international efforts to cool the energy markets.
Meanwhile, natural gas prices rose for the second time in eight sessions as production from offshore fields shut in by Hurricane Katrina proved slow in returning to normal.
About 35 percent of prestorm production from the Gulf of Mexico remained shut down, according to the U.S. Minerals Management Service.
Natural gas for October delivery rose 40.3 cents, or 3.7 percent, to $11.17 per million British thermal units on the Nymex. The market is up 14 percent since Aug. 26, the last trading session before Katrina struck the Louisiana coast.
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