WASHINGTON - US inventories of crude oil grew over the past week while gasoline reserves fell, according to government data released Wednesday that appeared to ease fears about a supply crunch.
The US Department of Energy (DoE) said crude oil reserves rose 2.4 million barrels to 317.1 million in the week to April 1, just shy of the 2.5 million barrel gain expected by financial markets.
However, crude oil reserves, up 22.8 million barrels over the past eight weeks, are now at the high end of what is considered normal for this time of year, despite near-record high futures prices.
On the New York Mercantile Exchange, crude oil futures dipped 14 cents to 55.90 dollars a barrel at 1525 GMT, up slightly from the opening price but a further retreat from the record around 58 dollars a barrel.
The DoE report showed a drop in gasoline inventories of 2.1 million barrels to 212.3 million, in line with market forecasts.
But reserves of gasoline remain about 5.5 percent higher than at the same time last year and DoE officials pointed out that refining activity has picked up over the past week.
With gasoline prices hitting new record highs, the market is sensitive to inventory levels as the United States enters the summer driving season.
The report noted a small rise of 700,000 barrels of distillates, a category including diesel and heating oil, to 104.1 million barrels.
Donald Luke at Fimat USA said the numbers were "slightly bearish" for the market.
"We finally saw a build in distillates, and the draw in gasoline inventories was in line," he noted. "The real interesting story is uptick in refinery capacity, which should help put more products in the market."
He noted that US refineries operated at 93.7 percent of capacity last week, up from 91.1 percent the prior week.
Luke said that with supply levels appearing adequate, some of the speculative fever in the oil market may diminish, but added that the price would need to drop further to push out some traders.
"We need to get through 52.50 dollars," he said, to get momentum moving downward.
A separate report on oil inventories by the American Petroleum Institute, delayed from the normal release time, showed an even sharper rise in US crude inventories, by 4.02 million barrels to 321.30 million.
The API data showed a modest rise in gasoline inventories by 250,000 to 212.68 million barrels.
The API report indicated a drop in distillate reserves of 245,000 barrels to 105.72 million.
04/06/2005 16:33 GMT