Updated from 3:06 p.m. ESTEnergy prices closed near $62 a barrel Wednesday as traders focused on threats to world oil supplies and disregarded an increase in domestic fuel inventories. Crude for March delivery climbed 56 cents to settle at $61.97, even though inventories of the fuel rose 1.6 million barrels to 328.3 million barrels last week, according to a government report. Analysts polled by Bloomberg and Platts expect the weekly inventory report to show a 1 million-barrel rise in crude stocks. Crude supplies are now 9.1% above the same period last year. The Energy Department releases its weekly petroleum supply report, which traders look to for insight into the country's supply and demand trends, every Wednesday at 10:30 a.m. EST. Robust fuel stockpiles usually help calm the energy markets, but since the supply report came in as expected, traders were once again looking overseas. Traders are concerned that rebel attacks in Nigeria and a standoff with Iran over its nuclear development will drastically cut world oil supplies. Shell ( RDS-A) has cut its production in Nigeria by 455,000 barrels per day due to attacks on its rigs and pipelines, while Chevron ( CVX) shaved its daily production by 13,000 barrels because of a pipeline leak. Nigeria, the fifth-largest supplier of crude to the U.S., has seen its oil production trimmed by 20% because of ongoing rebel attacks. Militants are seeking a share of the country's oil wealth and have been targeting oil companies as leverage. Nigeria produces about 2.5 million barrels of crude per day. The markets won't get any boost from the Organization of the Petroleum Exporting Countries, which meets next Wednesday to decide whether to keep production at 25-year highs. The group's president, Edmund Daukoru, told the Associated Press Wednesday that oil at $60 a barrel is a "fair price," which likely means OPEC won't trim supplies next week. Daukoru also reassured energy traders that Iran would not hold back oil from the markets to retaliate against the West over its nuclear development objections. Tehran recently restarted uranium enrichment, saying it needs the fuel for power production; the West is concerned it is working on weapons. The U.N. Security Council is set to discuss potential measures against the country at its next meeting on March 6. A proposed joint venture between Russia and Iran to enrich uranium in Russia may avert any U.N.-led measures against Tehran. On Thursday, the two sides will meet in Moscow to hammer out details of the plan. Futures of unleaded gasoline added 3 cents to close $1.62 a gallon after inventories rose 300,000 barrels to 225.9 million barrels last week. Still, they remain essentially the same as last year. A slight increase in demand made up for lower production last week. Gasoline prices will likely remain volatile this spring thanks to big inventories that have dampened prices and the phase-out of MTBE, a fuel additive, from gasoline. The EPA-mandated move, meant to combat water pollution, must be completed by May. That quick turnaround could mean supply shortages this summer as refiners switch to more ethanol-based gasoline. Gasoline for winter and spring delivery has lost 8% this year because traders don't want to be saddled with a useless contract. "It is becoming increasingly clear that the unleaded contract is losing its grip on being viable, traded-able instrument. It's also clear that fewer people want anything to do with the ill-fated MTBE contract," said Phil Flynn, an energy analyst with Alaron Trading in Chicago. A 1.5 million-barrel decline of distillates drove up the price of heating oil by 2 cents to $1.74 a gallon. Distillates, which include heating oil, fell to 134.1 million barrels because of cold weather in the Northeast and continued refinery maintenance. When the temperatures drop, consumers use more heating oil and help draw down the total level of distillates. Refiners, which have been shuttered for spring maintenance schedules as they switch to making gasoline for the summer driving season, operated at 85% of their capacity. Still, distillates are 14.4% above a year ago, thanks in large part to a surplus of heating oil. Recent frigid temperatures have arrived too late in the winter heating season to really impact storage levels. This year saw the warmest January on record, with an average temperature of 39.5 degrees, up 8.5 degrees from normal, according to NOAA's National Climactic Data Center in Asheville, N.C. Those warm temperatures shaved heating demands by 20%. February was about 3 to 5 degrees colder, but not cold enough to draw down fuel supplies. Natural gas eked out a meager 2 cent-increase to close at $6.73 per million British thermal units, nearly a one-year low. The heating fuel is at seasonal lows because there is 24% more in storage than last year. That means there is more than enough natural gas to meet any unexpected cold snaps, like a projected winter storm later this week. Short sellers have also contributed to some of natural gas' low prices. Shorting involves borrowing a contract and selling it a high price and then buying it back at a lower price. Open interest, or the number of outstanding contracts that are held at the end of each trading day, has risen by a net 32,145 contracts over the past two weeks, according to the Commodities Futures Trading Commission. Edward Meir, an energy analyst with Man Financial in Darien, CT, says that rising open interest suggests "that new shorts are constantly coming in and scuttling the chances of a bounce." The Energy Department releases its report on natural gas supplies at 10:30 a.m. EST on Thursday. Analysts surveyed by Bloomberg expected a drawdown of 155 billion cubic feet, which would be the largest drop since the week ended Dec. 23. However, stockpiles are likely to remain high because there hasn't been a sustained bout of cold temperatures to drive them down. In trading Wednesday, El Paso ( EP), one of the largest natural gas pipeline operators, said its fourth-quarter net-income narrowed to a loss of $162 million, compared to $542 million a year ago thanks. That breaks down to 26 cents per share after the payout of preferred dividends, versus 85 cents in 2004. Asset sales offset falling revenue, legal costs and write-downs of discontinued operations. El Paso lost $606 million, or 98 cents per share, last year, compared to $947 million, or $1.48 a share, the previous year. Shares of the Houston-based company fell 17 cents, or 1.3%, to $12.87.