Crude Rallies After Supply Rises

Updated from 1:51 p.m. EDT

Crude oil futures finished higher Wednesday, as concerns about a possible strike in Nigeria trumped an Energy Department report of a smaller-than-expected draw on inventories and President Bush's call for Congress to beef up production in the U.S.

The front month contract for light sweet crude recently finished up $2.67 at $136.68 a barrel on the New York Mercantile Exchange. Brent crude for August delivery finished $2.72 higher at $136.44 a barrel.

Heating oil was up 3.78 cents, or 1%, to $3.86 a gallon, while reformulated gasoline was up 4.88 cents, or 1.4%, to $3.4667 a gallon.

Energy futures reversed earlier losses after word broke in the afternoon that talks between Nigerian oil industry workers and Chevron(CVX Quote) had broken down, according to the Associated Press.

Earlier in the day, in a speech delivered in the White House's Rose Garden, Bush outlined a four-point plan to boost domestic oil production. He urged Congress to back White House efforts to increase access to oil deposits on the outer continental shelf and Arctic National Wildlife Refuge, tap into the "extraordinary potential" of oil shale and increase refining capacity in the U.S.

"With these four steps, we will take pressure off gas prices over time by expanding the amount of American-made oil and gasoline," Bush said, according to his prepared remarks. "We will strengthen our national security by reducing our reliance on foreign oil. We will benefit American workers by keeping our nation competitive in the global economy -- and by creating good jobs in construction, and engineering, and refining, maintenance, and many other areas."

Meanwhile, the Energy Department reported crude inventories had a draw of 2.42 million barrels for the week ended June 13, vs. the consensus expectation of 1.75 million barrels.