Oil falls below $77 as US distillate supplies rise
SINGAPORE: Oil prices fell below $77 a barrel Thursday in Asia on signs gasoline and distillate demand in the U.S. remain sluggish.
Benchmark crude for March delivery was down 73 cents to $76.60 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added 32 cents to settle at $77.33 on Wednesday.
Inventories of distillates, which include heating oil and diesel fuel, rose 1.3 million barrels last week, the American Petroleum Institute said late Wednesday. Analysts, eyeing a cold weather spell in much of the U.S. this month, had expected a drop of 1.6 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Gasoline inventories also grew while crude supplies fell slightly, the API said.
The Energy Department's Energy Information Administration is scheduled to announce its supply report later Thursday.
Crude has traded between $69 a barrel and $84 for most of the last six months as the global economy recovers from recession, but crude demand from developed countries remains weak.
Some analysts expect demand to soon pick up, and conspire with limited supplies to boost prices.
"In retrospect, it appears that the global economic crisis has postponed, but not canceled, a crunch which otherwise would have been starting to bite pretty much now," Barclays Capital said in a report. "The trading range should start to move up, with $80 per barrel transitioning from being an effective ceiling to instead becoming an effective floor."
In other Nymex trading in March contracts, heating oil fell 1.82 cents to $1.9885 a gallon, and gasoline dropped 1.19 cent to $1.9952 a gallon. Natural gas fell 0.6 cent to $5.38 per 1,000 cubic feet.
In London, Brent crude was down 72 cents at $75.54 on the ICE futures exchange.