(Repeats to clarify in lead that 14 percent rise was during
Wednesday trade, not for 2008 as a whole. No other changes to
text)
* Oil falls 54 pct for the year
* Refinery rates down, product prices up
* Russia to turn off gas taps to Ukraine tomorrow
(Updates prices at settlement, detail on yearly fall)
By Edward McAllister
NEW YORK, Dec 31 (Reuters) - U.S. crude oil rose 14 percent
on the final trading day of 2008 in thin pre-holiday trade on
Wednesday, tracking a jump in gasoline as a slowdown in
domestic refinery activity sparked fears of tightening fuel
supply this winter.
U.S. crude oil futures for February <CLc1> settled up $5.57
to $44.60 per barrel, but down 54 percent from the $95.98 on
the last day in 2007.
London Brent <LCOc1> settled up $5.44 at $45.59.
This year saw the record high prices in July above $147 a
barrel crash to the year low of $32.40 on Dec. 19 as the global
recession dissolved world demand.
Weekly U.S. inventory data on Wednesday showed a decline in
refinery activity and a 500,000 barrel rise in crude stocks,
compared with forecasts for a 1.5 million barrel decrease.
"There's a sign that the industry might be cutting back on
production rates to try to boost margins. As heating oil and
gasoline prices are rallying, crude is tagging along," said
Gene McGillian, analyst at Tradition Energy Stamford,
Connecticut.
"The market is trading in pretty thin volume ahead of
tomorrow's holiday and I think that's contributing to some of
the strength," he added.
Inventories of refined products also rose, though less than
analysts had expected. Gasoline stockpiles increased by 800,000
barrels, less than forecasts for a 1.5 million barrel build,
while distillates rose by 700,000 barrels, below expectations
for a 1.1 million barrel increase.
Demand for both gasoline and distillates, which include
heating oil, was lower than the same time a year ago, extending
the trend for reduced consumption. []
Markets also were watching a dispute over gas supplies
between Russia and Ukraine, which may have to buy distillates
from Europe if gas supplies from Russia are halted.
[]
Russia's gas export monopoly Gazprom said on Wednesday that
talks with Ukraine over gas prices for 2009 have failed, making
a cut-off of gas to Ukraine on Jan.1 unavoidable.
[]
"Thrown in with everything else, the Russian threat of a
gas cutoff has everyone a bit nervous ahead of the close," said
Tom Knight, trader with Truman Arnold in Texarkana, Texas.
Analysts forecast an average of $49 a barrel for U.S. crude
in the first quarter, and an average of $58.48 for next year,
down $14 from their previous forecasts, the latest Reuters poll
showed. []
Faced with slumping demand and prices, the Organization of
the Petroleum Exporting Countries (OPEC) this month said it was
cutting output 2.2 million barrels per day (bpd), its deepest
reduction ever.
Evidence is mounting that OPEC is complying with its goal
to reduce production, led by top exporter Saudi Arabia.
Market sources said on Tuesday the kingdom's supplies to
long-term buyers in February could imply production of even
less than its new OPEC production target. []
(Additional reporting by Timothy Gardner and Robert Gibbons in
New York, Christopher Johnson in London and Chua Baizhen in
Singapore; editing by Anthony Barker)
