SINGAPORE - Oil prices were steady Wednesday ahead of the release of a U.S. government report expected to show gasoline inventories fell last week.
Oil prices have been supported recently by a growing belief that U.S. gasoline supplies are falling as the summer driving season in the Northern Hemisphere approaches.
Last week, the U.S. Energy Department's Energy Information Administration said gasoline inventories fell more than expected during the week ended March 28. It was expected to report later Wednesday that gasoline stockpiles fell another 2.3 million barrels last week, according to a Dow Jones Newswires survey of analysts.
Analysts say refiners have cut back on gasoline production due to low profit margins. The rising price of crude means it costs refiners more to turn the raw product into motor fuel. The EIA was also expected to report that refinery use rose 0.7 percentage point to 83.1 percent of capacity, the survey showed.
Light, sweet crude for May delivery fell 25 cents to $108.25 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell 59 cents to settle at $108.50 a barrel Tuesday.
The EIA report was also expected to show crude oil stocks rose 2.4 million barrels. Stocks of distillates, which include heating oil and diesel fuel, were expected to fall 1.2 million barrels, the survey showed.
Crude stocks rose by an unexpected 7.3 million barrels in the week ended March 28. And although theoretically rising oil supplies could undermine prices, crude futures have been driven higher recently by weakness in the dollar and speculative buying by investors that believe rising demand overseas will keep sending commodity values skyward.
The U.S. Energy Department on Tuesday raised its forecast for the average price of crude in 2008, citing global demand and low surplus production capacity. The EIA, in its monthly report on petroleum supplies and demand, raised earlier price projections for crude oil, saying that the benchmark West Texas Intermediate contract would average $101 per barrel in 2008.
The agency had earlier predicted prices would average $94.
In other Nymex trading, heating oil futures fell 0.66 cent to $3.1036 a gallon, while gasoline prices added 0.03 cent to $2.7507 a gallon. Natural gas futures rose 10.3 cents to $9.80 per 1,000 cubic feet.
Brent crude futures fell 24 cents to $106.10 a barrel on the ICE Futures Exchange in London.