Crude up on US inventory data

London: Oil edged up from session lows yesterday, after crude oil stocks rose less than expected in the United States.

The latest weekly US fuel inventory data was mixed, with a rise in crude oil and distillate stocks, but a surprise fall in gasoline.

US light crude for June delivery was down 45 cents at $125.35 a barrel by 1515 GMT.

It has hit a string of record highs over the past week and reached a peak of $126.98 a barrel on Tuesday.

London Brent crude was down $1.25 at $122.85 a barrel.

"Crude runs were up more than expected and imports were down, leading to the small build in crude stocks," said Tim Evans, energy analyst at Citi Futures Perspective.

"The gasoline draw was a bit more than expected on a drop in imports. Overall, this is a mixed set of data, but we'd watch the heating oil price for a reaction to the build."

The US Energy Information Administration reported a rise of 200,000 barrels in crude oil stocks last week, less than the 1.8 million barrel increase forecast by analysts.

Distillates rose 1.4 million barrels, more than the 800,000 increase analysts had predicted. Gasoline stocks fell by 1.7 million barrels, when analysts had looked for no change.

Perceptions that supplies of distillates such as heating oil and diesel fuel are tightening helped drive US heating oil futures to a record of $3.6989 a gallon on Tuesday, which boosted the entire oil complex.

Driver

"Distillates are clearly driving the market," said Marc Lansonneur, Societe Generale's head of commodities derivatives in Asia.

European middle distillate stocks fell sharply in April to 361.28 million barrels, down 1.4 per cent from March and 7.2 per cent lower than a year ago, data from industry monitor Euroilstock showed on Tuesday.

Earlier, an assurance from Iran that it had no plans to cut oil exports had cooled down the market.

Prices had surged to a record of nearly $127 on Tuesday after Iranian President Mahmoud Ahmadinejad had said a proposal to cut crude output was under review.

A top Iranian official said yesterday that Tehran is continuing to sell oil to international customers as usual and has no plans to cut exports to world markets.