Published: Friday October 16, 2009 MYT 7:44:00 AM
Updated: Friday October 16, 2009 MYT 2:38:44 PM

Oil at highest price for year, above US$78(update)

SINGAPORE: Oil prices continued a weeklong rally Friday in Asia, jumping above $78 a barrel, after U.S. gasoline inventories unexpectedly fell.

Benchmark crude for November delivery rose as much as 59 cents to $78.17 before slipping back to $78.03 by midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract rose $2.40 to settle at $77.58 on Thursday.

The Energy Information Administration said Thursday that U.S. gasoline supplies fell 5.2 million barrels while analysts had expected a jump of 1.6 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Crude supplies rose 400,000 barrels, the EIA said, while analysts had anticipated an 2.2 million barrel gain.

Until this week, oil had bounced between $65 and $75 since May.

"The transition to a $70 to $80 range is now in full cry," Barclays Capital said in a report.

"We expect further transitions upward to occur in line with improvements in the underlying market data."

A falling U.S. dollar has also helped boost oil this week.

In other Nymex trading, heating oil was steady at $2.02 a gallon.

Gasoline for November delivery held at $1.95 a gallon.

Natural gas for November delivery jumped 3.0 cents to $4.51 per 1,000 cubic feet.

In London, Brent crude for December delivery rose 22 cents to $76.45 on the ICE Futures. exchange. - AP

<>Earlier report

DENVER: Oil prices climbed to highs for the year Thursday when a surprise drop in U.S. gasoline stockpiles pulled up the cost of fuels ranging from natural gas to heating oil.

One day after jumping above $75 per barrel for the first time this year, benchmark crude prices rose another $2.40 to settle at $77.58 Thursday on the New York Mercantile Exchange.

At one point, prices were 3 cents shy of $78 per barrel.

U.S. energy markets had largely brushed off a winter weather forecast this week for major winter storms in the East and icy, cold conditions even between Atlanta and Dallas.

The Energy Information Administration, however, reported Thursday that gasoline in storage fell by more than 5 million barrels at a time when most energy experts expected supplies to grow yet again.

The government report showed that refiners had cut way back on production, the result of idled facilities due to a lack of demand and also planned, seasonal maintenance.

Earlier Thursday, the dollar hit a 52-week low and the surprise report on gasoline may have led some people to believe supplies are growing tight, said oil analyst Tom Kloza said.

"The ignition switch for a rally got hit twice today," Kloza said.

For U.S. consumers, that may mean a slight drift upward in pump prices but not much, experts believe.

Crude and gasoline prices have remained relatively stable for months with no clear signs of an economic rebound.

Prices began to rise late last week when Alcoa, which kicks off the earnings season, reported that it had returned to profitability after three straight quarterly losses.

While the government reported that crude placed into storage grew again last week, it wasn't as big of a build up as many experts had expected and that may have helped push prices higher as well.

Natural gas inventories also grew, the EIA reported Thursday, and levels now sit nearly 15 percent above the five-year average.

Despite an uptick in prices, U.S. consumers should still be in for a relatively cheap winter as far as heating the home.

"The good news here is that heating oil distributors and natural gas distributors for that matter, too, were building stocks this past summer when prices were at their lowest," said analyst Stephen Schork.

"They're sitting on cheap inventory so you're not going to see a major spike in heating costs."

The EIA has forecast an 8 percent drop in heating bills this winter.

The government reported that heating oil prices rose 3 cents last week to $2.53 per gallon. Last year at this time, a gallon of heating oil cost $3.39.

In other Nymex trading, heating oil futures rose 7.53 cents to settle at $2.0181 a gallon while natural gas for November delivery rose 4.6 cents to settle at $4.482 per 1,000 cubic feet.

Gasoline for November delivery gained 8.74 cents to settle at $1.9449 a gallon.

In London, Brent crude rose $1.35 to settle at $74.45 on the ICE Futures exchange. - AP

Latest NYSE, NASDAQ and other business news, from AP-Wire

For latest Bursa Malaysia indices, charts and other information click here

New York Stock Exchange:
http://www.nyse.com

Nasdaq Stock Market:
http://www.nasdaq.com

For Tokyo Stock Exchange click here