Oil Prices Fall in Asian Trading

Yemen's Minister of Oil and Minerals, Khalid Mahfoudh Bahah, speaks at a media interaction, at the Petrotech-2007 conference, the 7th International Oil and Gas Conference, in New Delhi, India, Wednesday, Jan. 17, 2007. Bahah, said his government's budget has factored in crude prices averaging at $55 a barrel this year. Yemen currently produces 426,000 barrels a day. (AP Photo/Mustafa Quraishi) (Mustafa Quraishi - AP)

SINGAPORE -- Oil prices fell in Asian trading Friday after the U.S. Energy Department said U.S. crude inventories rose by the most in more than four years.

Light, sweet crude for February delivery dropped 22 cents to $50.26 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore. The contract fell 3.3 percent to $50.48 a barrel overnight in New York.

Crude futures have slipped for eight of the first 12 trading sessions of 2007, partly on mild winter temperatures in the U.S. Northeast, a key consumer of heating fuels, and growing energy stockpiles.

Skepticism about the Organization of Petroleum Exporting Countries' commitment to delivering 1.2 million barrels of production cuts that were supposed to have started in November also weighed on oil prices.

Victor Shum, an analyst with Purvin & Gertz in Singapore, said the dramatic increase in U.S. crude inventories "is a result of imports going up and indicates that OPEC production cuts have not really come through."

"In the short term, market sentiment is overwhelmingly bearish and it's possible for (the) price to go lower than $50. A lot is based on OPEC's plans to cut production," Shum said. "If OPEC maintains supply discipline and sticks to production cuts, the oil market will gain."

Crude stockpiles rose by 6.8 million barrels to 321.5 million barrels in the week ended Jan. 12, the Energy Information Administration said in its weekly report. It was the biggest barrel-by-barrel gain since October 2002. Analysts had been expecting an increase of just 325,000 barrels, according to a Dow Jones Newswires survey.

Gasoline stockpiles rose by 3.5 million barrels, and distillates, which include heating oil and diesel, rose by 900,000 barrels. Both were at or above the upper end of the average range for this time of year, the EIA said.

Heating oil futures lost 0.47 cents to $1.4660 a gallon, while natural gas prices rose 1.6 cents to $6.340 per 1,000 cubic feet.