Crude Oil Rises as U.S. Retail Sales, Gasoline Use, Increase

By Mark Shenk

Feb. 13 (Bloomberg) -- Crude oil rose after government reports showed that U.S. retail sales unexpectedly climbed and gasoline demand increased.

The 0.3 percent gain in retail sales for January reported by the Commerce Department is easing concern that the U.S. is in a recession. Gasoline demand advanced 1.2 percent to an average 9.02 million barrels a day last week, the Energy Department said. Crude-oil supplies rose 1.07 million barrels.

``The up-tick in retail sales and up-tick in gasoline demand are combining to further the recent rally,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``The smallish crude build is also providing support.''

Crude oil for March delivery rose 49 cents, or 0.5 percent, to settle at $93.27 a barrel at 2:48 p.m. on the New York Mercantile Exchange. Prices are up 58 percent from a year ago. Futures have dropped 6.8 percent since reaching a record $100.09 a barrel on Jan. 3.

Analysts estimated the report would show that U.S. crude-oil inventories rose 2.38 million barrels last week, according to the median of 14 responses in a Bloomberg News survey.

Crude-oil stockpiles jumped 18.2 million barrels, or 6.4 percent, in the past five weeks. This week's gain left stockpiles 1.2 percent above the five-year average for the period, the department said.

`$100 Range'

``We should move back into the $100 range in the next couple of weeks,'' said Adam Hewison, trader and president of Annapolis, Maryland-based Inc., which provides technical analysis of markets. ``The market is trying to tell you something when there's fundamentally bearish news and prices move higher.''

U.S. crude-oil imports fell 7.4 percent to 9.74 million barrels a day, the lowest since December, the report showed. Supplies of petroleum products dropped 20 percent to an average 3.36 million barrels a day, the report showed.

``The crude-oil number was a little less than expected because of the drop in imports,'' said Antoine Halff, the head of energy research at Newedge USA LLC in New York. ``There was a little fog that shut the Houston Ship Channel for a few days last week so we should see imports rebound next week.''

The Houston Ship Channel, which serves the largest U.S. petroleum port, was shut for most of Feb. 3 and Feb. 4 because of fog. The Houston area's eight refineries represent 13 percent of U.S. oil-processing capacity, according to data from the plant owners and the National Petrochemical and Refiners Association.

Global Demand

The International Energy Agency reduced its 2008 forecast for global oil demand by 200,000 barrels a day to 87.6 million barrels a day because of the slowing U.S. economy, a monthly report showed. That cut the annual growth rate to 1.9 percent from 2.3 percent forecast last month.

``Global demand growth is still strong,'' Hewison said. ``Demand growth in the U.S. may slow but it will continue to grow in India and China.''

The Organization of Petroleum Exporting Countries, which produces more than 40 percent of the world's crude oil, may cut production when it meets March 5 because demand for the fuel is falling, President Chakib Khelil said.

``One thing is for sure, we won't increase production,'' Khelil, who is also Algeria's oil minister, told reporters at a press conference in the country's capital of Algiers today.

OPEC rejected calls from U.S. President George W. Bush at its last meeting on Feb. 1 to boost production to help ease oil prices. The group instead maintained its output ceiling at 29.673 million barrels a day for 12 of its members. Iraq has no production quota.

OPEC Concern

``OPEC is worried that there will be more builds in the second quarter,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``I doubt they will cut output because they would take a really bad public-relations hit. Also, the Saudis would like to see prices down somewhat to help avoid a recession.''

Brent crude for March settlement rose 46 cents, or 0.5 percent, to close at $93.32 a barrel on London's ICE Futures Europe exchange. Brent touched a record $98.50 on Jan. 3.

Petroleos de Venezuela SA, the state oil company, cut off sales of crude, gasoline and diesel to Exxon Mobil Corp. in retaliation for the freezing of $12 billion in assets in a legal dispute. Venezuelan President Hugo Chavez threatened on Feb. 10 to cut off oil sales to the U.S., a warning that was widely discounted by industry analysts in both countries.

``We are due for a pullback from the recent rally as the news sinks in on the Venezuelan front,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``The worst-case scenario is that Venezuela will sell the oil at a loss and Exxon will replace it with oil from somewhere else.''

Venezuela was the fourth-biggest source of U.S. oil imports in the first 11 months of 2007, according to the Energy Department.

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