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Associated Press: Oil Briefly Hits $70 a Barrel

Thursday June 28, 10:01 am ET 
Oil Futures Briefly Hit $70 a Barrel on Supply Concerns

NEW YORK (AP) — Oil futures briefly hit $70 a barrel in New York trading Thursday for first time since Sept. 1 after a government report showed that gasoline inventories dropped unexpectedly just as the summer driving season is about to hit its peak.
 
Light, sweet crude for August delivery gained 95 cents to $69.92 a barrel on the New York Mercantile Exchange after rising briefly above $70. The front month contract last settled above $70 on Aug. 31.

Gasoline futures for July rose 1.34 cents to $2.268 a gallon. Brent crude for August delivery rose 18 cents to $70.71 a barrel on the ICE Futures exchange in London.

In other Nymex trading, July heating oil futures were up 1.06 cent to $2.0352 a gallon while natural gas prices for August delivery were flat at $6.929 per 1,000 cubic feet.

In its weekly inventory report on Wednesday, the U.S. Energy Department’s Energy Information Administration said gasoline inventories dropped by 700,000 barrels in the week ended June 22. Analysts polled by Dow Jones Newswires had expected a 1.1 million-barrel gain.

“The market is reacting to the surprising result,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. ”

On the other hand, the EIA report showed that crude oil supplies rose by 1.6 million barrels to 350.9 million barrels last week, above the average estimate of a 1 million barrel increase. Refinery utilization rebounded 1.8 percentage points to 89.4 percent, higher than estimates of a gain of 0.8 percentage points.

The weekly petroleum supply snapshot has been watched closely during a spring and early summer during which an unusually high number of refinery outages have led to high oil and gasoline futures prices and record U.S. gasoline prices at the pump.

“Gasoline demand stays strong. While it is still early in the driving season, June demand has now moved close to the all-time record for any month,” said Barclays Capital analyst Paul Horsnell.

The report also showed that distillate stocks, which include heating oil and diesel fuel, decreased by 2.3 million barrels and remain in the middle of average for this time of year. Analysts expected an increase of 200,000 barrels.

Associated Press writer Derrick Ho in Singapore contributed to this report.

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