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Oil prices up as US demonstrates ample supplies amid signs of moderate economic growth

By: Pamela Sampson, The Associated Press

Thursday, Mar. 7, 2013 at 3:27 AM | Comments: 0

An oilsands mine is seen near Fort McMurray, Alta., on July 9, 2008. THE CANADIAN PRESS/Jeff McIntosh

BANGKOK - Oil prices were slightly higher Thursday as reports of a moderately improving U.S. economy, which suggests increased fuel consumption, were neutralized by growing crude supplies.

Benchmark oil for April delivery was up 11 cents to US$90.54 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 39 cents to close at $90.43 per barrel on the Nymex on Wednesday.

The death on Tuesday of President Hugo Chavez of Venezuela, which sits on the world's second-largest oil reserves, has had little immediate effect on the price of oil so far.

Chavez oversaw a decline in oil production during his 14 years as the leader of Venezuela. Traders are anxious to see if the new government invites foreign investment in Venezuela's oil industry and is able to boost output.

"Over the longer term, changes in policy towards the energy sector might eventually allow Venezuela's oil production to return to the much higher levels seen in the late 1990s," Julian Jessop of Capital Economics wrote in an email commentary.

A report from the Federal Reserve issued Wednesday showed the U.S. economy strengthened across much of the country. The Fed's Beige Book report showed that auto sales, more hiring and the ongoing housing recovery helped the U.S. economy grow in the first two months of the year.

Also Wednesday, the U.S. Energy Information Administration said in its weekly report that U.S. oil supplies grew last week by 3.8 million barrels, or 0.4 per cent, more than three times the increase that analysts expected. The nation's supply of crude is 10.3 per cent above year-ago levels. And at more than 7 million barrels a day, U.S. oil production is at the highest level since the late 1990s.

Brent crude, used to price many kinds of oil imported by U.S. refineries, was unchanged at $111.06 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

— Wholesale gasoline dropped 0.6 cent to $3.118 a gallon.

— Heating oil fell 0.5 cent to $2.971 a gallon.

— Natural gas rose 2.6 cents to $3.496 per 1,000 cubic feet.

(TSX:ECA, TSX:IMO, TSX:SU, TSX:HSE, NYSE:BP, NYSE:COP, NYSE:XOM, NYSE:CVX, TSX:CNQ, TSX:TLM, TSX:COS.UN, TSX:CVE)

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