NEW YORK - Oil futures rose yesterday after the government reported larger-than-expected declines in crude and heating-oil inventories and on news of the killing of Pakistan's Benazir Bhutto.
In its weekly inventory report, the Energy Department's Energy Information Administration said oil inventories fell 3.3 million barrels last week, more than double the 1.3-million-barrel decline analysts expected. Inventories of distillates, which include heating oil and diesel fuel, fell 2.8 million barrels, much more than the expected drop of 800,000 barrels.
Heating-oil stocks "are just plunging," said Stephen Schork, a trader and analyst in Villanova, Pa.
Light, sweet crude for February delivery rose 65 cents to settle at $96.62 a barrel on the New York Mercantile Exchange after rising as high as $97.79. Heating-oil futures for January delivery rose 3.91 cents to settle at $2.6803 a gallon.
Oil prices also rose on news of the assassination of Pakistani opposition leader Bhutto and a vow by opposition politician Nawaz Sharif to boycott parliamentary elections next month, which raised concerns about geopolitical stability. Sharif also demanded that President Pervez Musharraf resign immediately.
Earlier in the week, oil prices rose when attacks by Turkish forces on Kurdish rebels in northern Iraq raised concerns about Iraqi oil supplies.
The weaker dollar also supported oil prices yesterday. Crude futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Analysts said other aspects of Wednesday's Energy Department report were also bullish. Gasoline supplies rose 700,000 barrels last week, about half the 1.4-million-barrel increase analysts surveyed by Dow Jones Newswires had expected. January gasoline rose 4.36 cents to settle at $2.4962 a gallon on the Nymex after earlier rising to a record $2.5085.
Refinery activity rose three-tenths of a percentage point last week to 88.1 percent of capacity. Analysts had expected an increase of six-tenths of a percentage point.
Crude supplies at the closely watched Nymex delivery terminal in Cushing, Okla., rose 100,000 barrels last week. Falling supplies in Cushing are seen as a symptom of a tight market. But while Cushing inventories have risen for several weeks, last week's increase was insignificant, said James Cordier, president of Liberty Trading Group, of Tampa, Fla.