Source AP ©

Oil prices rise in Asia, but remain below USD 77 a barrel after steep fall overnight

Oil prices edged higher in Asian trading Thursday after a roller-coaster session the previous day during which prices hit a new intraday record, then tumbled.

Light, sweet crude for September delivery added 14 cents to US$76.67 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore.

The contract fell US$1.68 to settle at US$76.53 a barrel Wednesday, after rising as high as US$78.77 earlier in the session - surpassing the previous intraday record of US$78.40, set in July 2006.

Prices climbed higher again Thursday after the U.S. Energy Department's Energy Information Administration reported that oil inventories fell by 6.5 million barrels last week, far more than the 690,000 barrel-decline analysts surveyed by Dow Jones Newswires had expected on average.

As the industry rebounds from a spring and early summer in which refiners experienced an unusual number of outages, it is drawing down crude inventories that had hit nine-year highs. Some investors see that draw as a sign crude inventories are tightening.

But gasoline futures fell as the report also showed refiners had ramped up their operations much quicker than expected. As the slide in gasoline futures prices accelerated, oil prices followed, analysts said.

Refinery utilization jumped by 1.9 percentage points to 93.6 percent of capacity, more than double an expected increase of 0.7 percentage points.

Gasoline inventories rose by 600,000 barrels, the EIA said. Analysts had expected an increase of 1.1 million barrels. Inventories of distillates, which include heating oil and diesel fuel, rose by 2.8 million barrels, twice the predicted increase of 1.4 million barrels.

Analysts have placed much of the blame for the recent run-up in oil prices on speculators and technical buying by large investment funds.

September Brent crude added 11 cents to US$75.46 a barrel on the ICE futures exchange in London.

Nymex gasoline futures lost 0.31 cent to US$2.0265 a gallon (3.8 liters) while heating oil prices rose 0.46 cent to US$2.074 a gallon. Natural gas rose 7.2 cents to US$6.424 per 1,000 cubic feet.