Oil hangs around $91 amid US gasoline supply jump

Oil prices stayed around $91 a barrel Wednesday after a report showed U.S. gasoline supplies rose more than expected, suggesting demand may have slowed.

By early afternoon in Europe, benchmark oil for February delivery rose 1 cent to $91.12 a barrel in electronic trading on the New York Mercantile Exchange.

The American Petroleum Institute said late Tuesday that gasoline inventories rose 7 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 2.9 million barrels. Inventories of crude rose 57,000 barrels and distillates added 1.5 million barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

"Traders will be eager to see if the huge jump in gasoline stocks is repeated in Wednesday's DOE figures," Cameron Hanover said in a report. "At the root of that increase would be a very low consumption number."

Crude rose $1.86, or more than 2 percent, to settle at $91.11 on Tuesday on news a 800-mile (1,300-kilometer) trans-Alaska pipeline, which normally carries about 620,000 barrels a day, remained shut after a leak was discovered Saturday at a North Slope pump station. Oil production on the North Slope was cut by 95 percent.

Alyeska Pipeline Service Co., which operates the pipeline from Prudhoe Bay, said late Tuesday it received permission from regulators to temporarily restart the flow of oil to keep ice from forming amid frigid winter temperatures. Alyeska said preparations were under way for the restart.

In other Nymex trading in February contracts, heating oil fell 0.25 cent to $2.6063 a gallon while gasoline futures slid 2.23 cents to $2.4561 per gallon. February natural gas futures gained 6.5 cents to $4.546 per 1,000 cubic feet.

In London, Brent crude was down 8 cents to $97.53 a barrel on the ICE Futures exchange, after nearly touching $98 on Tuesday, its highest point over 2 years.

Analysts said that if Brent rises above $100, it could lead to a "new wave of buying."

"We do not regard the current prices as justified in fundamental terms but we do not expect a return to 'normality' soon either," said a report from Commerzbank in Frankfurt.

Crude prices in Europe were boosted by the temporary closure of two offshore oil fields by Norway's Statoil due to gas leaks.