Wednesday, November 7, 2007

Oil's march to $100 stalls

Crude comes within $1.38 of triple digit levels, but gains tempered after U.S. inventories fall less than expected.

By Steve Hargreaves, staff writer

NEW YORK ( -- Oil prices fell Wednesday after inventories in the United States dropped less than expected last week, but only after the push toward $100 a barrel got as close as it has ever come, to within $1.38.

U.S. light crude for December delivery fell 10 cents to $96.60 a barrel on the New York Mercantile Exchange, after setting a new trading high overnight of $98.62. The price stood at $97.60 just before the inventory report was released.

Traders were expecting oil prices to climb following the inventory report. But oil was at first little changed - then fell - after the report said supplies declined, but not as much as expected.

In its weekly inventory report, the Energy Information Administration said crude stocks fell by 800,000 barrels last week. Analysts were looking for a drop of 1.6 million barrels, according to a Dow Jones poll.

Distillates, used to make heating oil and diesel fuel, rose by 100,000 barrels while gasoline supplies fell by 800,000 barrels. Analysts were looking for a 500,000 barrel decline in distillate supplies and a 200,000 barrel gain in gasoline stockpiles.

Most of the decline in crude is being blamed on an outage from Pemex, Mexico's national oil company. Mexico, after Canada, is the second largest source of imported U.S. oil.

Prices hit a new record earlier in the day after the International Energy Agency said China and India will sap world oil supplies faster than previously thought.

A falling dollar also pushed prices higher. The dollar hit a fresh low of $1.4729 against the euro Wednesday on speculation that China would seek to diversify some of it's foreign currency reserves. Top of page

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