Oil hovers below $75 as US crude supplies grow

[September 23, 2010]  SINGAPORE (AP) -- Oil prices hovered below $75 a barrel in Asia on Thursday, as rising crude inventories in the U.S. suggest demand remains weak.

Benchmark crude for November delivery was down 5 cents to $74.66 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract had lost 26 cents to settle at $74.71 on Wednesday.

The Energy Department's Energy Information Administration said Wednesday that crude inventories increased by 1 million barrels for the week ending Sept. 17. Analysts had expected a drop of 1.5 million barrels, according to Platts, the energy information arm of McGraw-Hill.

Inventories of gasoline and distillates also rose, the administration said.

Oil has weaved around the $75 level for most of the past year despite strong crude demand in emerging economies, such as China, as growing oil supplies in the U.S. weigh on prices.

Combined inventories of crude, gasoline and distillates grew last week to 165 million barrels more than two years ago, Cameron Hanover said. Just three weeks before, the supply was 132 million barrels over two years ago.

"We continue to increase the amount of oil we have in storage against the amount held two years ago," Cameron Hanover said. "We still have way too much oil, and demand is not trending higher in any meaningful way."

In other Nymex trading in October contracts, heating oil fell 0.66 cent to $2.1064 a gallon and gasoline rose 0.23 cent to $1.9037 a gallon. Natural gas gained 1.5 cents to $3.981 per 1,000 cubic feet.

In London, Brent crude fell 29 cents to $77.66 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.