Surge in oil supply drives down prices

Pipeline slowdown made little difference in overall decline

Posted: Thursday, November 23, 2006

WASHINGTON - Oil prices fell Wednesday after U.S. government data showed rising supplies of crude. Natural gas futures declined on the heels of a separate report that showed healthy domestic inventories of the home-heating fuel.

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And on the day before Thanksgiving, a busy day for motorists, the average retail price of gasoline stood at $2.23 a gallon, three cents above last year.

The Energy Department's weekly petroleum report said crude-oil inventories swelled by 5.1 million barrels last week to 341.1 million barrels, or 6 percent above year ago levels.

The nation's gasoline stocks grew by 1.4 million barrels to 201.7 million barrels after a drop in refinery activity, leaving them less than 1 percent below year ago levels. The supply of distillate fuel, which includes heating oil and diesel, is slightly above year ago levels even after a 1.2 million-barrel decline that left inventories at 133.8 million barrels.

On Tuesday, oil climbed by more than $1 on news of temporary pipeline troubles in Alaska.

Oil rose above $60 Tuesday following news that the trans-Alaska Pipeline was flowing at just 25 percent of its normal 800,000 barrel-a-day capacity, as strong winds disrupted tanker loading. Also, traders worried about shutdowns at Exxon Mobil Corp.'s refinery in Baytown, Texas, America's biggest at 562,500 barrels a day, and Citgo's 156,000 barrel-a-day refinery in Corpus Christie, Texas.

Oil prices have fallen by about 23 percent since hitting an all-time trading high above $78 a barrel in mid-July. They haven't settled above $62 a barrel since Oct. 1, despite the Organization of Petroleum Exporting Countries' announcement in mid-October that it would reduce output by 1.2 million barrels a day.

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