Oil closes below $88 on inventories data

New York -- Oil prices reversed earlier gains and closed below $88 a barrel Wednesday after the U.S. government said heating oil and gasoline inventories increased.

Light, sweet crude oil for January delivery fell 83 cents or 0.94 percent to close at $87.49 a barrel on the New York Mercantile Exchange. It earlier hit $90.39 after the Organization of Petroleum Exporting Countries said it would keep production ceilings stable.

The 13-nation group, which supplies more than 40 percent of the world's oil, said it was already pumping enough crude to meet winter fuel demand.

U.S. Energy Secretary Samuel Bodman had urged OPEC ministers, meeting in Abu Dhabi, United Arab Emirates, to increase output.

The Energy Department said after the meeting U.S. gasoline supplies rose 4 million barrels to 200.6 million last week, and distillate stocks, which include heating oil, grew 1.4 million barrels to 132.3 million.

Inventories at Nymex's Cushing, Okla., delivery terminal rose 700,000 barrels to 15.9 million, which analysts saw as a signal the oil market was easing.

Overall U.S. crude inventories fell 8 million barrels to 305.2 million, the department said.

Natural gas rose 3 cents or 0.42 percent at $7.185 per 1,000 cubic feet.

Heating oil fell 2.25 cents or 0.9 percent to $2.4893 a gallon.

Reformulated-gasoline blendstock for oxygen blending tumbled 3.47 cents or 1.54 percent to $2.217 a gallon.

AAA said the average U.S. retail regular unleaded gasoline price was $3.044 a gallon, down 0.8 cent from Tuesday's $3.052 a gallon.

Copyright 2007 by United Press International.