Updated from 11:38 a.m. EDT
Oil prices posted small gains Wednesday amid mixed news of slightly increased inventories and terrorist attacks on Iraq's oil infrastructure that shut down exports.
The benchmark U.S. crude rose 23 cents, or 0.6%, to end at $37.65 a barrel, its second consecutive close below the $38 level. Gasoline prices lost about half a cent to close at $1.146 a gallon.
A key Department of Energy report said supplies climbed to 302.9 million barrels for the week ended June 11, up 800,000, or 0.3% from last week, and up 6.8% from the same period a year ago. Gasoline inventories were down slightly at 205.9 million barrels, dropping, 500,000 barrels, or 0.2% from the preceding week and 0.8% from the year-ago period.
Phil Flynn, head trader at Alaron Trading in Chicago, said the positive report and the attacks failed to move the market because traders' concerns are fixed on the impending arrival of additional oil following the Organization of Petroleum Exporting Countries' recent decision to boost production.
"The market is able to justify lack of build in gas supplies because we're going to have plenty of oil soon," he said. "Every piece of news was bullish before OPEC's move -- now every piece of news is bearish."
He said the current price range would probably serve as a temporary bottom, unless promised OPEC oil failed to arrive. "It better come soon because if it doesn't, the market's psychology will change," he said.
Flynn said the market has set prices without relying on Iraqi oil, which minimizes the impact of recent attacks on pipelines that shut down operations at Iraq's main export terminal in the southern city of Basra. In another attack Wednesday, gunmen killed Ghazi Talabani, 70, a senior adviser in Iraq's North Oil Company, in the northern city of Kirkuk. Iraq was exporting 1.6 million barrels of oil per day before that attacks.It's unclear how long it will be before exports resume, but the OPEC's recent decision to boost production appears to have allayed any major concerns about supply at the moment.
"Based on the reaction to the loss of Iraqi oil and the market's ability to take it in stride, it seems the market has priced that in," Flynn said. "But if you have any other disruptions anywhere else, it's going to be tough to absorb that."
Oil prices have fallen more than 12% from their record high, touched right before OPEC's meeting two weeks ago.
Members of the cartel agreed to raise the group's production quota by 2 million barrels a day in July and another half-a-million barrels a day in August, should that prove necessary. The current ceiling is 23.5 million barrels a day. Market analysts say the move is largely symbolic because the cartel's members are already producing some 2 million barrels a day above their official quotas.
Traders bid up prices on short-term supply concerns triggered by strong global demand and terrorist attacks on oil industry personnel and facilities in the Persian Gulf region ahead of the peak summer driving season in the U.S. and Europe.