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Associated Press: Oil Prices Move Toward $68 a Barrel

By GEORGE JAHN, Associated Press Writer
VIENNA, Austria – Oil and gasoline futures rose Thursday, continuing to rally on U.S. government data released the day before showing a decline in domestic supplies of motor fuel.
Although crude stocks increased, tension between the West and Iran, violence in Nigeria and Venezuelan state pressure on major foreign oil companies added to bullish market sentiment.
Light, sweet crude for May delivery rose 53 cents to $67.60 a barrel on the New York Mercantile Exchange. Gasoline futures rose 3.69 cents to $1.984 a gallon while heating oil prices increased by nearly 2 cents to $1.8860 a gallon. Natural gas rose by more than 10 cents to $7.140 per 1,000 cubic feet.
May Brent crude at London's ICE Futures exchange rose 69 cents to $67.79 a barrel.
The U.S. Energy Department said in its weekly report Wednesday that domestic inventories of gasoline shrank by 4.4 million barrels last week to 211.8 million barrels, or roughly in line with year-ago levels. The nation's supply of distillate, which includes diesel and heating oil, fell by 2.6 million barrels to 121.6 million barrels, or 16 percent more than last year.
The decline in refined products comes as refineries temporarily shut down operations for maintenance. Vienna's PVM Oil Associates said production output was 120,000 barrels a day lower than the week before.
These so-called turnarounds at refineries also temporarily reduce the demand for oil and, as a result, U.S. crude oil inventories increased by 2.1 million barrels last week to 342.8 million barrels, or almost 8 percent above year-ago levels.
However, the outlook for crude supplies remains uncertain in key producing countries.
The U.N. Security Council voted unanimously last week to demand that Iran suspend nuclear enrichment but Iran has remained defiant, saying its enrichment plans are “irreversible.” The standoff has ratcheted up tension over Iran's nuclear program.
Also of concern to the market is Nigeria, where about 27 percent of output has been knocked out by ethnic rebel attacks in the Niger Delta region. Militants have pledged more attacks to get southerners a bigger cut of the oil revenues held by the federal government. The country usually produces 2.4 million barrels a day.
In Vienna, PVM said uncertainties in Nigeria and Venezuela — the largest non-Middle East OPEC producer — will likely result in total OPEC output falling to 29.45 million barrels a day for the first quarter of the year. That's down about 500,000 barrels a day.

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