Oil Prices Rise On New Details On Supply

VIENNA, Austria (AP) _ Oil prices rose Thursday after dipping briefly below $96 a barrel, indicating traders were back in a buying mood after pocketing gains from crude's recent rally. <br/><br/>Oil

Thursday, November 8th 2007, 8:52 am

By: News On 6

VIENNA, Austria (AP) _ Oil prices rose Thursday after dipping briefly below $96 a barrel, indicating traders were back in a buying mood after pocketing gains from crude's recent rally.

Oil prices had surged to a record above $98 a barrel in the previous session amid supply concerns, the weak U.S. dollar and OPEC's apparent reluctance to pump more crude into the market.

Prices fell after the U.S. Energy Department's petroleum supply report Wednesday confirmed a view that oil supplies are falling, but offered no real surprises.

``The market was expecting a slightly larger drop in crude supply last week,'' said Mark Pervan, a commodity strategist at Australia & New Zealand Bank in Melbourne.

The U.S. Energy Department's statistical arm reported that oil inventories fell 800,000 barrels during the week ended Nov. 2, half the decline expected by analysts surveyed by Dow Jones Newswires.

Light, sweet crude for December delivery gained 45 cents to $96.79 a barrel by noon in Europe in electronic trading on the New York Mercantile Exchange.

The contract's drive toward $100 stalled with a 33-cent drop Wednesday, settling at $96.37 a barrel after a volatile session that saw futures down nearly $2 a barrel at times. Prices rose as high as $98.62 Wednesday, a record.

Some analysts think oil prices have far outpaced levels justified by the underlying principles of supply and demand. They blame market speculators for pushing crude prices to record levels, and many predict a sharp decline.

However, ``U.S. crude supplies are very critical at the moment. There's a lot of concern that there's not enough supply going into the U.S. winter heating season,'' Pervan said.

Crude futures are likely to resume their ascent toward $100 as upward momentum was still strong, he said. A critical factor in the direction of the oil prices has been the U.S. dollar's performance, he noted.

``The general trend seems to be for further weakness in the dollar, and that's certainly going to push the case for $100-oil pretty quickly,'' he said.

The U.S. dollar has been hitting multiple-decade lows against other major currencies, and Wednesday in Europe dropped to another record low against the 13-nation euro.

Vienna's PVM Oil Associates also noted a ``threatening supply crunch in the North Sea'' as supporting prices, noting that up to five platforms may be shut down there due to storms.

OPEC's decision, made at its September ministerial meeting, to boost production by 500,000 barrels a day beginning Nov. 1, appeared to have little effect, with the Center for Strategic & International Studies in Washington noting the increase ``has so far been ineffective in dampening prices.''

The Energy Information Administration's report also said refinery utilization remained flat at 86.2 percent of capacity. Analysts had expected an increase of 0.8 percentage point.

Gasoline inventories fell 800,000 barrels last week, countering analyst expectations for an increase of 200,000 barrels. Inventories of distillates, which include heating oil and diesel fuel, rose 100,000 barrels last week. Analysts expected a decline of 500,000 barrels.

Heating oil futures were up by over a penny to $2.6282 a gallon (3.8 liters) while gasoline prices climbed by nearly a cent to $2.4505 a gallon.

Natural gas futures added 3.6 cents to $7.660 per 1,000 cubic feet.

In London, December Brent crude gained 96 cents to $94.20 a barrel on the ICE futures exchange.