OIL prices inched higher after a US government report showed gasoline stocks rose unexpectedly, but still not enough to dispel supply fears at the kickoff of the summer driving season.
The Energy Information Administration reported that gasoline stocks grew by an average of 1.5 million barrels last week to 196.7 million barrels, nearly doubling analysts' expectations but still well below the lower end of the average for this time of year, The Associated Press reported.
Crude oil supplies rose by two million barrels to 344.2 million barrels, just above the upper end of the average. The forecast was for a drop of 200,000 barrels.
The EIA reported that refinery utilization rose 1.6 percent last week to 91.1 percent. Output is now at average levels after this spring's unprecedented number of refinery outages that have dragged down US gasoline supplies.
Distillate inventories, which include heating oil and diesel fuel, edged up 500,000 barrels to 120.3 million barrels, falling short of analysts' estimate of 900,000 barrels.
Oil and distillate stocks remain just below the upper end of average for this time of year.
Light, sweet crude for July delivery rose 26 cents to settle at US$65.77 a barrel on the New York Mercantile Exchange.
Brent crude for July delivery climbed US$1.08 to settle at US$70.60 a barrel on the ICE Futures exchange in London, while gasoline futures rose 0.41 cent to US$2.3104 a gallon.
Prices were supported by concerns that -- despite the rising gasoline stockpile -- supplies would be stretched as more vehicles hit US roads this summer, starting with the long Memorial Day weekend.
"We don't have any more weeks to catch up before the summer driving season," said Phil Flynn, an analyst at Alaron Trading Corp in Chicago.
Eager to act ahead of the weekend, the US House of Representatives yesterday approved a measure that would for the first time create a federal law outlawing energy price gouging.
The bill directs the Federal Trade Commission and Justice Department to prosecute oil companies, traders or retail operators if they take "unfair advantage" or charge "unconscionably excessive" prices for gasoline and other fuels.
Also yesterday, news that Iran has expanded its uranium enrichment program, as well as unannounced exercises by the US Navy off the Iranian coastline, boosted prices, Flynn said.
Other potential factors included a partial oil production shutdown in Alaska and a US government report predicting a busy hurricane season.
The US National Oceanic and Atmospheric Administration said Tuesday it predicted 13 to 17 tropical storms, with seven to 10 of them becoming hurricanes this season. It said there was a 75 percent likelihood of above-normal hurricane activity.
In other Nymex trading, heating oil futures rose 2.5 cents to settle at US$1.9323 a gallon, while natural gas prices fell 4.4 cents to US$7.757 per 1,000 cubic feet.