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Oil prices steady above USD 67 a barrel after steep rise on gasoline worries

Oil prices were little changed Friday after rising overnight to a nine-month-high finish on worries the U.S. refining industry can't meet peak summer gasoline demand.

Light, sweet crude for July delivery was down 10 cents at US$67.55 a barrel on the New York Mercantile Exchange, mid-afternoon in Singapore.

The contract rose US$1.39 to settle at US$67.65 a barrel Thursday, the first time since September that Nymex crude closed above US$67 a barrel.

Brent crude for August delivery fell 28 cents to US$71.08 a barrel on the ICE Futures exchange in London.

The U.S. Energy Department reported Wednesday that refinery utilization fell last week, and that gasoline inventories did not grow.

"The thing about those numbers is everybody knew that they (were) going to be struggling to keep up with gasoline demand as it was ... but they didn't seem to make any progress refining-wise," said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

Refinery utilization, which had been expected to grow by 0.8 percent, fell 0.4 percent to 89.2 percent, the second straight weekly decline, according to the Energy Information Administration. Most analysts say refineries should be using 94 percent to 95 percent of their capacity at this time of year.

"They're having trouble keeping (refinery) capacity use up ... it should be high and rising," Gorey said.

Gasoline inventories were unchanged at 201.5 million barrels for the week ended June 8, the EIA report said. Analysts surveyed by Dow Jones Newswires expected inventories to rise by 2 million barrels.

Also supporting prices were tensions between the West and Iran, which continues to assert it will never suspend uranium enrichment, and the Organization of Petroleum Exporting Countries' refusal to boost production.

Gorey said market participants are also concerned over whether OPEC will raise output levels later in the year to meet winter demand in the Northern Hemisphere.

Heating oil futures were flat at US$2.0161 a gallon (3.8 liters) while natural gas prices lost 1.8 cent to US$7.790 per 1,000 cubic feet.

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