Oil price slips as US crude, gasoline stockpiles grow; natural gas down sharply

NEW YORK, N.Y. – The price of oil barely budged Wednesday, while natural gas plunged to the lowest level since late September.

Benchmark West Texas Intermediate crude slipped five cents to end at US$93.10 a barrel in New York trading. After rising on the year’s first trading day following the resolution of a budget standoff in Washington, oil has been holding around US$93.

That hasn’t been the case with natural gas. The fuel has dropped seven per cent since the start of the year as forecasts point to warmer than expected weather in parts of the United States. About half of U.S. households use natural gas for heat.

Natural gas futures closed down 10.5 cents, or 3.3 per cent, to finish at US$3.11 per 1,000 cubic feet. The price had been at or above US$3.20 since Sept. 26.

For oil, a report of rising U.S. crude supplies offset a forecast for higher aluminum demand this year from Alcoa.

The Energy Information Agency said that U.S. crude supplies grew by 1.3 million barrels last week, while gasoline stocks increased by 7.4 million barrels, or 3.3 per cent. The gasoline supply was significantly above analysts’ expectations.

Oil supplies are about eight per cent higher than a year ago and oil production in the U.S. — at seven million barrels a day — is at levels not seen since the 1990s.

Late Tuesday, Alcoa predicted that aluminum demand would rise seven per cent this year, slightly better than the six per cent increase in 2012. That indicates the company expects a pickup in economic activity, which in turn could boost demand for oil.

Brent crude, used to price international varieties of oil, dropped 18 cents to end at US$111.76 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the New York Mercantile Exchange, wholesale gasoline fell two cents to finish at US$2.78 a U.S. gallon (3.79 litres) and heating oil rose one cent to end at US$3.07 a gallon.