Updated from 11:29 a.m. EST
Crude oil futures shot past $62 a barrel Wednesday as domestic fuel supplies shrank and forecasts were calling for cold weather.
Higher gasoline production and lower imports shaved crude stockpiles by 300,000 barrels last week, according to the U.S. Energy Department's weekly petroleum update released this morning. At 340.8 million barrels, supplies are nearly 6% above last year.
Seasonal maintenance started winding down at refiners, leading to an increase in run rates by one percentage point to 88.1% last week. Despite increased capacities, inventories of gasoline dropped by 600,000 barrels, and distillates tumbled by 1 million barrels. Analysts polled by
had projected increases of 450,000 barrels and 500,000 barrels respectively, as refiners ramped up production.
Light, sweet crude for January delivery surged $1.47, or 2.4%, to a two-month high of $62.46 a barrel on Nymex. Unleaded gasoline added 4 cents to $1.67 a gallon, and heating oil rose 6 cents to $1.79 a gallon.
Since Monday, when insurgents attacked an Iraqi oil processing facility and the Saudi oil minister suggested OPEC will again trim production at its meeting on Dec. 14, crude prices have added more than $1. They likely will go even higher if OPEC agrees to deeper production cuts in less than two weeks.
"We may take action to reduce production if we see the data indicating the supply still exceeds demand," Ali al-Naimi, the Saudi oil minister, told
OPEC began trimming output in November by 1.2 million barrels a day, but prices have not consistently remained above $60, the lowest price the group would like to see. Over the past month, oil prices have been trading between $58 and $61, largely on speculation that OPEC members haven't uniformly trimmed exports. The Energy Department, in fact, said in a recent report that the group's exports were down by only 800,000 barrels per day.
The Saudi oil minister suggested as much when he said his country won't bear the brunt of the reduction. "The kingdom is not under any circumstances ready to be the only one stabilizing the market through what is called being a swing producer," said Naimi, again according to
Natural gas soared to a nine-month high of $8.87 per million British thermal units, up 31 cents, on cold-weather projections for much of the country. A cold front is expected to sweep across the U.S. this week and reach the Northeast by Saturday. However, brimming supplies and a return of warm weather in a week will likely keep natural gas prices low.
At 3.44 trillion cubic feet, natural gas inventories are currently 5% above a year ago. Thanks to cooler weather last week, supplies are expected to dip by 22 billion cubic feet, according to a
analysts' poll, in the Energy Department's weekly update on Thursday.
Energy shares followed crude higher, with the Amex Oil and Philadelphia Oil Service Indices up by at least 2.5%.
led the advances among refiners and drillers by as much as 5% each.
stock was up about 3% after company executives told analysts that annual growth should be 6% to 9% per year over the next four years. The Houston-based driller had expected yearly growth of 7% to 9% through 2008.
, the country's largest publicly traded energy company, was recently ahead by 2.5%.