Oil holds near $58 after supply report

Crude stockpiles rise and gasoline stocks drop less than expected, offsetting each other to keep prices near the low end of multi-week range.

By Steve Hargreaves, CNNMoney.com staff writer

March 14 2007: 4:49 PM EDT

NEW YORK (CNNMoney.com) -- Oil prices steadied near $58 Wednesday after government said supplies of crude oil rose less than expected but the fall in gasoline stocks was less than thought.

U.S. light crude for April delivery settled up 23 cents to $58.16 a barrel on the New York Mercantile Exchange. Oil traded 5 cents higher just prior to the report's release.

In its weekly inventory report, the Energy Information Administration said crude stocks rose by 1.1 million barrels last week. Analysts were looking for a gain of 1.6 million barrels, according to Reuters.

Gasoline supplies slipped by 500,000 barrels, while distillates, used to make heating oil and diesel fuel, fell by 2.8 million barrels. Analysts were looking for a 2.4 million barrel decline in gasoline supplies and a 2 million drop in distillates.

Despite the drop in gasoline and distillate supplies, all three products remain at above average levels for this time of year.

EIA also said refineries operated at 85.6 percent capacity last week, which was slightly below estimates and slightly below last week's level.

Crude prices have fallen from over $62, or 6 percent, in the last 4 sessions.

Warm weather in the United States, expectations that OPEC will leave production unchanged, and economic concerns prompted by woes in the housing sector have all acted to push prices lower.

Crude is now at the low end of its multi-week range, although prices have swung widely in the last year. Oil hit a trading high of $78.40 last July before briefly dipping below $50 a barrel at the start of 2007.

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Refinery problems have plagued the country over the last several weeks, leading to a rise in gasoline prices.

Valero said Tuesday that it had shut a gasoline-making unit at its St. Charles, Louisiana, refinery, according to Reuters.

Valero said it was carrying out repairs on the fluid catalytic cracker's flue gas cooler and estimated the production loss at the refinery over the next 10 days at 85,000 barrels per day (bpd) of gasoline and 15,000 bpd of distillates.

There were also reports Tuesday about a fire that hit Chalmette Refining's refinery in Louisiana and news that Chevron Corp.'s overhaul of its San Francisco Bay area refinery would be extended by three weeks.

In OPEC news, the cartel is largely expected to keep production levels unchanged when it meets Thursday in Vienna.

Traders said keeping production at current levels should push prices lower, despite news on Tuesday that worldwide stockpiles are shrinking.

The International Energy Agency, adviser to 26 industrialized nations, said the world would need extra oil from the Organization of Petroleum Exporting Countries in the coming months.

The report also said OECD oil stockpiles are set for their largest drawdown in a decade in the first quarter due to an extremely cold February and the impact of recent OPEC cuts.

Stocks of the major oil companies, including BP (Charts), Exxon Mobil (Charts), ConocoPhillips (Charts), Chevron (Charts) and Royal Dutch Shell (Charts), have mostly risen and fallen in-line with crude prices.

-Reuters contributed to this report.