Oil prices up as supply falls for 4th week

AP News
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Posted: Dec 30, 2009 3:26 PM

Oil prices edged above $79 a barrel Wednesday as the nation's crude supply fell for the fourth week in a row.

Gasoline supplies also fell unexpectedly and the contract for January delivery, which expires Thursday, neared a yearly high.

After weeks of declines, prices at the pump appeared to be catching up to crude, which has risen 7.3 percent since Dec 21.

Retail gas prices began to tick higher over the weekend and are now on the longest upward streak since October. They jumped another 1.5 cents overnight to a new national average of $2.623 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Gas is still a penny cheaper than last month, however, and increases have been slight.

Demand for gasoline is increasing as well. A weekly report from the Energy Information Administration showed gas demand was 1.1 percent higher over the past four weeks compared with the same period last year, even though a gallon now costs about $1 more.

The increase in demand is partly due to a late surge in buying as people filled up cars and snow blowers before a major storm hit the Northeast this month.

While supplies have fallen nearly 14 million barrels over the past four weeks, they remain relatively high compared with past years.

Most energy experts discounted oil prices that have risen every day this week because so many traders take the week off for the holiday and volume is about half of the norm.

Benchmark crude for February delivery added 41 cents to settle at $79.28 a barrel on the New York Mercantile Exchange. In London, Brent crude for February delivery rose 39 cents to settle at $78.03 a barrel on the ICE Futures exchange.

In other Nymex trading, heating oil for January delivery added less than a penny to settle at $2.1093 a gallon, and gasoline for rose 3 cents to settle at $2.0406 a gallon. Natural gas for February delivery gave up 13.1 cents to settle at $5.709 per 1,000 cubic feet.

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Associated Press writers Pablo Gorondi in Budapest, Hungary and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.