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Oil, Gas Futures Rise On Report

NEW YORK (AP) _ Energy futures rose Wednesday after the government reported that inventories of crude oil at a key Oklahoma terminal fell last week. Gasoline prices, meanwhile, extended their decline at the pump.

The report, from the Energy Department's Energy Information Administration, showed overall increases in gasoline inventories and refinery utilization, and declines in inventories of crude oil, roughly in line with analyst expectations.

But traders chose to focus on a 1.4 million barrel decline in oil inventories in and around Cushing, Okla., delivery point for crude traded on the New York Mercantile Exchange.

``The one location in the U.S. that seems to be short of crude oil is Cushing, Okla.,'' said Tim Evans, an energy analyst at Citigroup in New York.

At the pump, gas prices maintained their downward track overnight, falling 1.1 cents to a national average of $2.945 a gallon, according to AAA and the Oil Price Information Service. Prices peaked at $3.227 a gallon in late May.

Retail prices typically lag the gasoline futures market. Both retail and futures prices spiked higher this spring on concerns refiners were not producing enough gas to meed growing consumer demand. But gas futures have fallen more than 32 cents a gallon over the last two weeks on growing evidence refiners are increasing gasoline production.

That trend reversed on Wednesday, as gasoline futures rose 3.53 cents to $2.0830 a gallon on the Nymex. Gas futures were being pulled higher by light, sweet crude for September delivery, which rose $1.75 to $75.31 a barrel after falling immediately after the inventory report was released.

``There is a temptation to interpret a decline in inventories as bullish,'' Evans said.

September Brent crude rose 84 cents to $75.92 a barrel on the ICE Futures exchange in London.

Nymex heating oil futures rose 1.51 cents to $2.0460 a gallon, and natural gas futures added 2.1 cents $5.884 per 1,000 cubic feet.

The EIA said gasoline inventories grew by 800,000 barrels in the week ended July 20, slightly larger than the 510,000-barrel increase analysts surveyed by Dow Jones Newswires, on average, had predicted.

Refinery utilization grew by 0.7 percent to 91.7 percent, nearly in line with analyst predictions of an 0.8 percent increase.

The EIA said crude oil inventories fell by 1.1 million barrels, exactly what analysts had expected. Distillates, which include heating oil and diesel, rose by 1.5 million barrels, more than double analyst forecasts for a 730,000-barrel increase.

Imports of gasoline rose by 737,000 barrels a day to an average of 1.65 million barrels per day last week, the highest weekly average ever. Crude oil imports averaged 10.4 million barrels a day, up 3,000 barrels a day from the previous week.

Gasoline demand has averaged 9.7 million barrels a day over the past four weeks, about 1.2 percent above last year, the EIA said.

The report shows refiners are catching up after experiencing an unusual number of problems this spring, analysts said.

``I think it doesn't really change the story,'' said Antoine Halff, head of energy research at Fimat USA LLC. ``Refineries are coming slowly back on line.''

But it also shows how dependent the U.S. is becoming on overseas producers.

``We're dependent on large gasoline imports to meet demand,'' Halff said.

The combination of imports and growing production is reducing the country's year-over-year deficit of gasoline inventories, Evans said. A week ago, inventories were 5.1 percent below 2006 levels _ they are now only 3.3 percent behind.

Underpinning gasoline and oil futures Wednesday was news of a fire at a 300,000 barrel-per-day Exxon Mobil Corp. refinery in southern England. It was not immediately clear whether there would be an impact on production.

``That's clearly a supportive feature as far as the gasoline market is concerned,'' Evans said.
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