Bloomberg Energy Tue, 31 Oct 2000, 7:21pm EST

10/31 18:39 Crude Oil Rises on Unexpected Decline in U.S. Inventories By Stephen Wisenthal

Sydney, Nov. 1 (Bloomberg) -- Crude oil prices rose as a report showed an unexpected drop in U.S. inventories, leaving supplies in the world's largest oil consumer and importer close to a 24-year low.

Stocks of crude oil fell 0.3 percent, the American Petroleum Institute said in its weekly report. Analysts had expected a rise of as much as 1 percent, after increases in production by the Organization of Petroleum Exporting Countries.

``This was a real surprise,'' said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc. in St. Louis. ``You have got to wonder when the oil will hit with OPEC producing so much.''

Crude oil for December delivery rose as much as 38 cents, or 1.2 percent, to $33.08 in after-hours electronic trading on the New York Mercantile Exchange.

The price has gained 29 percent so far this year. In September, oil reached a 10-year high of $37.80 amid concern about shortages of heating fuel in the U.S., and the potential for supply disruptions from the Middle East.

U.S. crude oil inventories fell 749,000 barrels last week to 281.66 million barrels, the API said in its report, released after the end of floor trading in New York. Ten analysts surveyed by Bloomberg News had expected an increase of between 2.2 million and 2.7 million barrels, on average.

The decline left supplies 8.7 percent lower than a year ago, wider than the 8 percent deficit the week before and close to the 24-year low of 279.0 million barrels reached on Aug. 4.

Imports Rebound

The inventory drop came even as imports rebounded to their highest rate in more than three months.

Supplies of heating oil rose 1.15 million barrels, or 2.5 percent, to 46.98 million, the biggest gain in seven weeks. Heating oil inventories are about 35 percent lower than a year ago, little changed from the gap in last week's report.

OPEC said this week it will raise its daily quotas by 2 percent, or 500,000 barrels, to send prices lower before economic slowdowns or alternate energy sources cut their market share.

Still, few members have the capacity to quickly match their new targets, and that may keep U.S. supplies close to the 24-year low, analysts said.

OPEC has already raised quotas by 3.2 million barrels a day in three previous increases this year.

``Prices are going to stay high until the oil gets here,'' said O'Grady. Inventories will rise eventually, ``we just don't know when,'' he said.

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