OIL INVENTORIES

EnergyOil Tumbles After Inventory BuildBy Simon ConstableTheStreet.com Staff Reporter1/18/2007 3:47 PM ESTURL: http://www.thestreet.com/markets/energy/10333313.htmlUpdated from 2:14 p.m. EST
Oil prices fell again Thursday and neared the psychologically important $50 level following news of higher inventories in the U.S.
Front-month crude contracts closed down $1.76 to $50.48 a barrel on the New York Mercantile Exchange, and other key products in the energy space were lower, as well. Heating oil was down 3 cents at $1.47 a gallon, while gasoline was lower by 2 cents to $1.36 a gallon.
Natural gas was the one riser, gaining 9 cents to $6.32 per million British thermal units.
The decline in oil came after the Energy Information Administration said that stocks of crude oil grew 2.2% last week to 322 million barrels. Inventories of gasoline and distillate fuel oils also were up, the EIA said.
"It seems the world is flush with oil, especially relative to recent years," says Peter Rodriguez, professor of economics at the Darden Graduate School of Business Administration and an energy market watcher. "This is the opposite of what one would expect this time of year," he says, noting that warm weather had reduced demand for heating fuels in the Northern Hemisphere.
With inventories so high, Rodriguez expects crude prices to remain closer to $50 a barrel than $60 for the next several weeks. In turn, that should help keep a lid on consumer price inflation, he says.
The energy exchange-traded funds -- the U.S. Oil (USO) fund and the iPath Goldman Sachs Crude Oil Index (OIL) -- were both losing 2.2% in recent action.
Turning to the energy complex, Fortis Bank upped its stock price target on Range Resources (RRC) to $36 a share from $32 and reiterated a buy rating. The stock was recently down 0.5% at $27.62.
Elsewhere, RBC Capital Markets hit Whiting Petroleum (WLL) with a downgrade, cutting its rating on the stock to underperform from sector perform. Shares recently were down 75 cents, or 1.8%, at $41.60.
Among the major energy companies, Exxon Mobil (XOM) was losing 1.1%, while Royal Dutch Shell (RDS.A) was down a fraction.