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Draw in gas supplies sends energy prices upward

Draw in gas supplies sends energy prices upward

Oil prices climbed to new highs for the year Thursday when a surprise drop in U.S. gasoline stockpiles pulled up the cost of fuels ranging from natural gas to heating oil.
One day after jumping above $75 per barrel for the first time this year, the benchmark crude price rose another $2.02 to $77.20 on the New York Mercantile Exchange.
U.S. energy markets had largely brushed off a recent weather forecast for major winter storms in the East and icy, cold conditions even between Atlanta and Dallas.
The Energy Information Administration, however, reported that gasoline in storage fell by more than 5 million barrels when most energy experts had expected supplies to grow yet again.
Earlier Thursday, the dollar hit a 52-week low and the surprise report on gasoline may have led some people to believe supplies are growing tight, said oil analyst Tom Kloza said.
"The ignition switch for a rally got hit twice today," Kloza said.
For U.S. consumers, that may mean a slight drift upward in pump prices, but not much, experts believe.
Crude and gasoline prices have remained relatively stable for months with no clear signs of an economic rebound.
Prices began to rise late last week when Alcoa, which kicks off the earnings season, reported that it had returned to profitability after three straight quarterly losses.
While the government reported that crude placed into storage grew again, it wasn't as big of a build up as many experts had expected and helped push prices higher.
Natural gas inventories also grew, the EIA reported Thursday, and now sit nearly 15 percent above the five-year average.
Despite an uptick in prices, consumers should still be in for a relatively cheap winter as far as heating the home.
"The good news here is that heating oil distributors and natural gas distributors for that matter, too, were building stocks this past summer when prices were at their lowest," said analyst Stephen Schork. "They're sitting on cheap inventory so you're not going to see a major spike in heating costs."
The EIA has forecast an 8 percent drop in heating bills this winter.
In other Nymex trading, heating oil rose 6 cents to $2 a gallon while natural gas for November delivery rose 7.4 cents to $4.51 per 1,000 cubic feet. Gasoline for November delivery gained 7.2 cents to fetch $1.9295 a gallon.
In London, Brent crude rose $1.09 to $74.19 on the ICE Futures exchange.
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Associated Press writers Alex Kennedy in Singapore and George Jahn in Vienna contributed to this report.