Oil hovers above $108 amid mixed US supply report

Michael Stone, of Boston, gases up his car at a Gulf station, in Newton, Massachusettes. Photo: AP

Oil prices hovered above $108 a barrel Wednesday in Asia after a U.S. crude supply report showed mixed signals about demand.

Benchmark crude for April delivery was down 21 cents at $108.13 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 13 cents to settle at $108.34 on Tuesday.

In London, Brent crude for April delivery was down 36 cents to $121.53 a barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories fell 2.8 million barrels last week, suggesting stronger demand. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 1.3 million barrels.

However, inventories of gasoline rose unexpectedly by 568,000 barrels and crude supplies at the key U.S. storage facility in Cushing, Oklahoma rose 120,000 barrels, the API said.

“The API report was bullish in the big picture sense, with a large unexpected draw in crude oil inventories, but we are not convinced,” energy consultant The Schork Group said in a report.

The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.

Traders are also mulling the impact rising global interest rates will have on economic growth and demand for crude. On Tuesday, China hiked interest rates for the fourth time since October in a bid to slow inflation.

“So far China’s rate hikes have not collared inflation,” The Schork Report said. But oil prices are likely to fall once the rate hike effects are felt, it said.

In other Nymex trading in April contracts, heating oil fell 0.7 cent to $3.18 a gallon and gasoline dropped 1.6 cents to $3.19 a gallon. Natural gas futures were up 0.6 cent at $4.24 per 1,000 cubic feet.