Published: August 06, 2008 10:30 am            

Oil Prices

By STEVENSON JACOBS

AP Business Writer

NEW YORK (AP) — Oil prices were little changed near $119 a barrel Wednesday ahead of a key government report on U.S. energy stockpiles that could offer further proof of declining demand for gasoline and other petroleum products.

Light, sweet crude for September delivery added 22 cents to $119.39 a barrel in early trading on the New York Mercantile Exchange. The contract fell $2.24 on Tuesday to settle at $119.17 a barrel.

Oil will probably drop further unless the U.S. Energy Department's Energy Information Administration says in its weekly oil inventory report that gasoline stocks fell significantly, said Tetsu Emori, who manages a commodity markets fund at ASTMAX Futures Co. in Tokyo.

"If we don't get a strong number, oil prices will likely fall further," he said.

The EIA report on U.S. oil stocks for the week ended Aug. 1 was due out at 10:30 a.m. EDT. The petroleum supply report was expected to show gasoline stocks fell 1.4 million barrels, according to the average of analysts' estimates in a survey by energy research firm Platts.

The Platts survey also showed that analysts projected crude oil inventories to have fallen 1.2 million barrels during last week.

Investors again shrugged off tension over Iran's nuclear program. Iran's response to an incentives package aimed at defusing a dispute over its enrichment of uranium is unacceptable, U.S. officials said Tuesday. Prospects of new sanctions against the country are now more likely.

The market seemed to be reacting less to potentially bullish factors like the weather and geopolitical developments and instead was turning its attention more to fundamentals, "in particular the rocky demand outlook in certain countries," said analysts at JBC Energy in Vienna, Austria.

Crude oil has fallen about $28, or about 19 percent, since reaching a record high of $147.27 on July 11.

In other Nymex trading, heating oil futures rose less than a penny to $3.2836 a gallon, while gasoline prices added 1.47 cents to $2.9711 a gallon. Natural gas futures shed 4 cents to $8.686 per 1,000 cubic feet.

In London, September Brent crude rose 37 cents to $118.07 a barrel.

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Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.

        

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