Light Demand Dampens Oil

Although natural gas inventories are expected to drop by 65 billion cubic feet last week, the decline is lower than the five-year average of 127 billion cubic feet. The U.S. Energy Department reports natural gas and petroleum supply figures one day late on Thursday because the federal government was closed on Monday in observance of the Christmas holiday.

Crude inventories were expected to drop by 2.5 million barrels last week as refiners ramped up production and finished seasonal maintenance. The closure of three key shipping channels in Louisiana and Texas because of heavy fog last week also contributed to the supply decline. Refining activity likely inched up by 0.3% to 91%, according to a Bloomberg poll of energy analysts.

Distillates, which include heating oil and jet fuel, likely rose by 500,000 barrels and gasoline by 750,000 barrels. Inventories of gasoline are currently about 3% below last year, and distillates are 1.2% lower.

Low supplies and higher demand bumped up wholesale unleaded gasoline by 1 cent to $1.58 a gallon. Americans can take more road trips when the weather is mild, as it has been throughout much of the country.

Energy shares were up a modest 1.2% on the Amex Oil Index. Anadarko Petroleum(APC Quote), Marathon Oil(MRO Quote) and Total(TOT Quote) rose the most on the index of 13 drilling and refining companies, closing up from 1.9% to 2.7%.