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Oil falls below US$49 amid gloomy data
Source: Agencies |
April 2, 2009, Thursday
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Online Edition
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OIL prices staged a late rally but still closed below US$49 a barrel yesterday, as more signs of a sick economy fueled worries about energy consumption. The U.S. oil inventories are now at levels not seen in more than 15 years.
Benchmark crude for May delivery fell US$1.27 to settle at US$48.39 a barrel on the New York Mercantile Exchange. The price tumbled as low as US$47.26 during Tuesday's session but surged a bit late, along with Wall Street stock prices. The Dow Jones industrials added about 150 points in late afternoon trading, in part from a report showing a rebound in pending home sales - a bright spot in a slew of mostly bleak economic news.
In London, Brent prices fell 79 cents to settle at US$48.44 a barrel on the ICE Futures exchange.
Oil prices rose sharply last month - from US$40 to above US$53 - taking their cue from a rally in stock markets. But new signs of a prolonged recession - which has crushed energy demand around the world - is again pushing prices lower.
In a measure of U.S. manufacturing activity, the Institute for Supply Management said yesterday the sector contracted for the 14th straight month in March, but at a slower pace than anticipated.
As expected, the Energy Department reported yesterday that crude inventories continued to rise last week, and gasoline stockpiles jumped despite predictions for a steep drop.
Crude inventories grew by 2.8 million barrels, or 0.8 percent, to 359.4 million barrels for the week ended March 27, the Energy Department's Energy Information Administration said in its weekly report. Oil stockpiles have not been this high since July 1993, according to EIA data. They're also 15.5 percent above year-ago levels.
Crude is piling up as airlines, manufacturers, automakers and just about every other sector slows down and millions of workers lose their jobs.
Growing inventories are likely to contribute to some relief for motorists when they fill their tanks.
"You do have a strong correlation between crude prices and gasoline prices," said Jim Ritterbusch, president of energy consulting group Ritterbusch and Associates. "So if we see a large build in crude supplies, it's going to put more pressure on crude prices, which in turn will mean more pressure on gasoline prices."
After ticking up steadily for the past week, U.S. retail gas prices fell one-tenth of a cent overnight, with the national average for a gallon of regular unleaded pegged at US$2.047 (54 cents a liter), according to auto club AAA, Wright Express and Oil Price Information Service.
Analysts say pump prices should remain well below levels seen last summer, when gasoline topped US$4 a gallon amid record crude prices.
Data from Japan and China also suggest those economies - the two largest in Asia - have yet to see any benefit from the massive fiscal stimulus packages announced by their governments.
The contraction in China's manufacturing worsened last month, according to a key survey. In Japan, the world's No. 2 economy, confidence in the country's major manufacturers dived to an all-time low.
Some analysts say production cuts by the Organization of Petroleum Exporting Countries have helped to stabilize the price of oil, though there are still doubts about the level of compliance with the promised cuts of 4.2 million barrels a day.
Compliance by OPEC members with production quotas is important because OPEC accounts for about 40 percent of global supply.
In other Nymex trading, gasoline for May delivery fell 4.96 cents to settle at US$1.3717 a gallon, and heating oil fell 2.21 cents to settle at US$1.3458 a gallon.
Natural gas for May delivery fell 8.1 cents to settle at US$3.695 per 1,000 cubic feet. Earlier, natural gas hit a new low of US$3.629 per 1,000 cubic feet.
Benchmark crude for May delivery fell US$1.27 to settle at US$48.39 a barrel on the New York Mercantile Exchange. The price tumbled as low as US$47.26 during Tuesday's session but surged a bit late, along with Wall Street stock prices. The Dow Jones industrials added about 150 points in late afternoon trading, in part from a report showing a rebound in pending home sales - a bright spot in a slew of mostly bleak economic news.
In London, Brent prices fell 79 cents to settle at US$48.44 a barrel on the ICE Futures exchange.
Oil prices rose sharply last month - from US$40 to above US$53 - taking their cue from a rally in stock markets. But new signs of a prolonged recession - which has crushed energy demand around the world - is again pushing prices lower.
In a measure of U.S. manufacturing activity, the Institute for Supply Management said yesterday the sector contracted for the 14th straight month in March, but at a slower pace than anticipated.
As expected, the Energy Department reported yesterday that crude inventories continued to rise last week, and gasoline stockpiles jumped despite predictions for a steep drop.
Crude inventories grew by 2.8 million barrels, or 0.8 percent, to 359.4 million barrels for the week ended March 27, the Energy Department's Energy Information Administration said in its weekly report. Oil stockpiles have not been this high since July 1993, according to EIA data. They're also 15.5 percent above year-ago levels.
Crude is piling up as airlines, manufacturers, automakers and just about every other sector slows down and millions of workers lose their jobs.
Growing inventories are likely to contribute to some relief for motorists when they fill their tanks.
"You do have a strong correlation between crude prices and gasoline prices," said Jim Ritterbusch, president of energy consulting group Ritterbusch and Associates. "So if we see a large build in crude supplies, it's going to put more pressure on crude prices, which in turn will mean more pressure on gasoline prices."
After ticking up steadily for the past week, U.S. retail gas prices fell one-tenth of a cent overnight, with the national average for a gallon of regular unleaded pegged at US$2.047 (54 cents a liter), according to auto club AAA, Wright Express and Oil Price Information Service.
Analysts say pump prices should remain well below levels seen last summer, when gasoline topped US$4 a gallon amid record crude prices.
Data from Japan and China also suggest those economies - the two largest in Asia - have yet to see any benefit from the massive fiscal stimulus packages announced by their governments.
The contraction in China's manufacturing worsened last month, according to a key survey. In Japan, the world's No. 2 economy, confidence in the country's major manufacturers dived to an all-time low.
Some analysts say production cuts by the Organization of Petroleum Exporting Countries have helped to stabilize the price of oil, though there are still doubts about the level of compliance with the promised cuts of 4.2 million barrels a day.
Compliance by OPEC members with production quotas is important because OPEC accounts for about 40 percent of global supply.
In other Nymex trading, gasoline for May delivery fell 4.96 cents to settle at US$1.3717 a gallon, and heating oil fell 2.21 cents to settle at US$1.3458 a gallon.
Natural gas for May delivery fell 8.1 cents to settle at US$3.695 per 1,000 cubic feet. Earlier, natural gas hit a new low of US$3.629 per 1,000 cubic feet.
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