NEW YORK Oil futures retreated from a new record over $100 a barrel set Thursday after the government reported a larger-than-expected decline in crude oil inventories and an unexpected increase in heating oil supplies.
One day after oil prices briefly touched $100 for the first time, the Energy Department's Energy Information Administration said crude inventories fell by 4 million barrels last week, much more than the 1.7 million barrel decline analysts surveyed by Dow Jones Newswires, on average, had expected.
On the other hand, inventories of distillates, which include heating oil and diesel fuel, rose by 600,000 barrels, countering analyst expectations that distillate supplies would fall by 600,000 barrels. And supplies of gasoline rose by 1.9 million barrels, more than the 1.3 million-barrel increase analysts had expected.
The report ultimately pulled prices lower by showing that critical heating oil supplies and refinery capacity are growing more than expected.
Light, sweet crude for February delivery fell 44 cents to settle at $99.18 a barrel on the New York Mercantile Exchange after earlier rising to $100.09, a trading record.
"Any surprises (in the report) are more the result of false expectations as opposed to anything truly remarkable in the data," said Tim Evans, an analyst at Citigroup Inc. in New York, who added that crude inventories often fall this time of year, while distillate and gasoline supplies typically increase.
February gasoline fell 2.75 cents to settle at $2.5414 a gallon on the Nymex, and February heating oil fell 2.13 cents to settle at $2.7191 a gallon. Both contracts set new trading records Thursday.
February natural gas fell 17.6 cents to settle at $7.674 per 1,000 cubic feet.
At the pump, meanwhile, gas prices rose 0.3 cent overnight to a national average of $3.052 a gallon, according to AAA and the Oil Price Information Service. Retail gas prices have rebounded in recent weeks, following oil's lead.
Crude's move to $100 a barrel prompted Indonesian officials to announce plans to ask OPEC to boost output to bring down oil prices, Dow Jones reported. While that may be tempting to some Organization of Petroleum Exporting Countries members, many analysts think high prices will themselves do the trick by cutting demand.
"It is unlikely the cartel will decide to increase output quotas ahead of the normally low-demand second quarter," said Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Conn., in a research note. "Furthermore, the U.S. economy is slowing, the result of which is likely to be lower demand for oil."
Indeed, there are already signs demand is slowing. Gasoline demand fell last week by 160,000 barrels, and rose only 0.1 percent over the last four weeks compared to the same period last year. Analysts consider year-over-year demand growth of under 1.5 percent to be tepid.
Also in its weekly report, the EIA said crude supplies at the closely-watched Nymex delivery terminal in Cushing, Okla., were unchanged last week at 17.5 million barrels. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise.
Refinery activity rose by 1.3 percent last week to 89.4 percent of capacity. Analysts had expected refinery use to increase by 0.4 percentage point.
Crude imports rose last week by an average of 204,000 barrels a day to 10 million barrels a day. Gasoline imports rose 136,000 barrels a day to an average of 1.2 million barrels a day.
Prices have been volatile in recent days due to low holiday week trading volumes. That means some of the price moves, including Thursday's record, may be exaggerated.
"We're still in a little bit of a holiday trading lull," said Evans, who noted that volumes on Wednesday when oil first reached $100 were about 72 percent of normal.