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Oil falls as US supplies outweigh Mideast tensions
Source: Agencies |
February 15, 2011, Tuesday
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THE price of benchmark crude fell to its lowest level in 12 weeks yesterday as oil traders weighed growing U.S. oil supplies against unrest in the Middle East.
Benchmark West Texas Intermediate crude fell 77 cents to settle at US$84.81 a barrel on the New York Mercantile Exchange. U.S. supplies of oil are rising, while demand for energy products remains tepid.
"The U.S. market is not reacting to anything because it's just so oversupplied," said Tom Bentz, analyst at BNP Paribas Commodity Futures.
Meanwhile, Brent crude rose US$2.14 to settle at US$103.08 a barrel on the ICE Futures exchange in London, with traders concerned that unrest in several Middle East countries may disrupt oil supplies in the region. Brent is used to price oil in Asia and in Europe. It also goes to some U.S. East Coast refineries to produce gasoline.
There were anti-government protests in Iran, Bahrain, Yemen and Algeria following the resignation of Egypt's President Hosni Mubarak last week. The military said it will guide Egypt through a democratic transition, but labor protests over wages and working conditions continue around the country.
Traders are concerned that the unrest could interfere with shipments of oil from OPEC countries such as Iran, analysts said. The 12-nation Organization of Petroleum Exporting Countries, of which Saudi Arabia is the de facto leader, supplies over a third of the world's crude.
"The entire region's production comes into question," PFGBest analyst Phil Flynn said. "The risk is still very, very high."
"The reactions that we're seeing in the markets over what's going on in the Middle East are quite startling," Bentz said. "I know there's potential for problems there, but it's not like there's been one drop of lost oil from the Middle East."
China's reported that exports rose almost 38 percent in January to US$150.7 billion. That's more than double the rate in December. It also had near-record imports of crude oil. China is the world's second-largest economy after the U.S. and the second-largest consumer of oil, according to the Energy Information Administration.
That demand has helped drive oil prices higher in recent months. While China's economy is robust, growing at a pace of nearly 10 percent at the end of last year, the government is worried about inflation and has taken steps to try to slow growth and rising prices. If China's economy slows, so will its demand for oil, and that could affect prices of oil and other commodities, Bentz said.
In other Nymex trading in March contracts, heating oil rose 5.46 cents to settle at US$2.7504 a gallon and gasoline gained 5.22 cents at US$2.5174 a gallon. Natural gas rose 1.5 cents to settle at US$3.925 per 1,000 cubic feet.
Benchmark West Texas Intermediate crude fell 77 cents to settle at US$84.81 a barrel on the New York Mercantile Exchange. U.S. supplies of oil are rising, while demand for energy products remains tepid.
"The U.S. market is not reacting to anything because it's just so oversupplied," said Tom Bentz, analyst at BNP Paribas Commodity Futures.
Meanwhile, Brent crude rose US$2.14 to settle at US$103.08 a barrel on the ICE Futures exchange in London, with traders concerned that unrest in several Middle East countries may disrupt oil supplies in the region. Brent is used to price oil in Asia and in Europe. It also goes to some U.S. East Coast refineries to produce gasoline.
There were anti-government protests in Iran, Bahrain, Yemen and Algeria following the resignation of Egypt's President Hosni Mubarak last week. The military said it will guide Egypt through a democratic transition, but labor protests over wages and working conditions continue around the country.
Traders are concerned that the unrest could interfere with shipments of oil from OPEC countries such as Iran, analysts said. The 12-nation Organization of Petroleum Exporting Countries, of which Saudi Arabia is the de facto leader, supplies over a third of the world's crude.
"The entire region's production comes into question," PFGBest analyst Phil Flynn said. "The risk is still very, very high."
"The reactions that we're seeing in the markets over what's going on in the Middle East are quite startling," Bentz said. "I know there's potential for problems there, but it's not like there's been one drop of lost oil from the Middle East."
China's reported that exports rose almost 38 percent in January to US$150.7 billion. That's more than double the rate in December. It also had near-record imports of crude oil. China is the world's second-largest economy after the U.S. and the second-largest consumer of oil, according to the Energy Information Administration.
That demand has helped drive oil prices higher in recent months. While China's economy is robust, growing at a pace of nearly 10 percent at the end of last year, the government is worried about inflation and has taken steps to try to slow growth and rising prices. If China's economy slows, so will its demand for oil, and that could affect prices of oil and other commodities, Bentz said.
In other Nymex trading in March contracts, heating oil rose 5.46 cents to settle at US$2.7504 a gallon and gasoline gained 5.22 cents at US$2.5174 a gallon. Natural gas rose 1.5 cents to settle at US$3.925 per 1,000 cubic feet.
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