Oil futures prices increased on world markets Tuesday as US Energy Sec. Bill Richardson voiced concerns about low heating oil stocks in the Northeast.
At a congressional hearing on petroleum prices, Richardson called for legislation to create a regional heating oil reserve by this winter. That sent brokers scurrying to buy futures contracts in late trading on the New York Mercantile Exchange, reversing earlier losses.
After that market closed, the American Petroleum Institute reported the first increase in US crude stocks in seven weeks, up 2.25 million bbl to a total 291 million bbl for the week ended June 23.
However, API reported only a modest increase of 351,000 bbl in distillates as refiners instead scrambled to produce the reformulated gasoline mandated by the Environmental Protection Agency for this summer. Distillate stocks, including heating oil, totaled 104 million bbl for the week, down 27 million bbl or 26% below year-ago levels.
The July contract for home heating oil led Tuesday's rally on the NYMEX, gaining 1.8� to 81.88�/gal, while unleaded gasoline for the same month rose 1.35� to $1.0652/gal.
Also on the NYMEX, the August contract for the benchmark US blend of light, sweet crudes gained 43� to $32.06/bbl, while the September contract was up 47� to $30.88/bbl Tuesday. But in after-hours electronic trading, both contracts eased back to $32.05/bbl and $30.84/bbl, respectively.
In London, the August contract for North Sea Brent gained 49� to $30.24/bbl on the International Petroleum Exchange. The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes was up 36� to $29.86/bbl.
Some OPEC and non-OPEC producers reportedly are unhappy with continued high oil prices, which they would like to lower to the level of $25/bbl.
OPEC Pres. Ali Rodriguez told reporters Tuesday that group will increase production again "if it is necessary." However, he said, "We have to wait at least one or two weeks to see how the market behaves."
Meanwhile, market analysts are predicting high oil prices will persist until winter.
The July contract for natural gas also jumped 12.6� to a record $4.69/Mcf on the NYMEX. US gas stocks are already at critically low levels, and utilities will need more gas to meet accelerating power demands as summer heats up.
On the IPE, the July contract for gas lost 4� to the equivalent of $2.72/Mcf.