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Oil rebounds from 2 days of losses
Source: Agencies |
April 14, 2011, Thursday
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OIL rebounded yesterday from a two-day decline, ending an up-and-down trading day above US$107 per barrel.
The price of benchmark oil has fluctuated as analysts and traders disagree over how much higher it can go. Oil has surged as much as 35 percent since the middle of February.
Goldman Sachs, a major player in oil markets, thinks crude is overpriced and warned investors that it could be time to sell. OPEC and the International Energy Agency also have said that high prices could be forcing people to reduce driving and cut back on fuel purchases.
While most analysts agree that the world has plenty of oil, supplies are tighter as unrest in Libya keeps most of the oil-rich country's exports offline. Libya supplied about 2 percent of the world oil. And Japan is expected to boost oil imports to make up for power lost from nuclear generators damaged in last month's earthquake and tsunami.
The combination of tighter supplies with increased international demand from big energy consumers like China could keep prices elevated for some time. China is the second biggest user of petroleum behind the U.S.
Cameron Hanover analyst Peter Beutel said in a research note that he doesn't think oil prices have peaked yet. "There has been pain and unhappiness because of higher oil prices, but it has not yet done its worst," Beutel said. "Ultimately, we feel things have to get beyond unacceptable before a real top will be in place."
Benchmark West Texas Intermediate crude for May delivery gained 86 cents to settle at US$107.11 per barrel yesterday on the New York Mercantile Exchange. The contract is still down more than 5 percent for the week.
The Energy Information Administration's weekly supply report did little to clarify where oil prices are headed. The EIA said the nation's crude supplies rose by 1.6 million barrels last week to 359.3 million barrels. That's 1.5 percent above year-ago levels. However, gasoline supplies dropped by 7 million barrels - more than five times what analysts expected. Supplies of distillate fuels, which include diesel and jet fuel, also unexpectedly declined by 2.7 million barrels.
Shrinking supplies of gasoline, diesel and other refined fuels can boost demand for crude, but analyst and trader Stephen Schork pointed out that the drop is partially due to the temporary shutdown of a Sunoco refinery in Pennsylvania.
The EIA said wholesale gasoline demand fell by 1.6 percent when compared with the same period last year. Some analysts see an overall slowdown in American driving in the face of rising gasoline prices. MasterCard SpendingPulse, which tracks spending at 140,000 service stations around the country, said late Tuesday that motorists have bought less gas for six weeks in a row.
In other Nymex trading for May contracts, heating oil gained 3.02 cents to settle at US$3.2028 per gallon, while gasoline futures gained 7.83 cents to settle at US$3.2424 a gallon. Natural gas futures added 4.3 cents to settle at US$4.141 per 1,000 cubic feet.
In London, Brent crude rose US$1.90 to settle at US$122.33 per barrel on the ICE Futures exchange.
The price of benchmark oil has fluctuated as analysts and traders disagree over how much higher it can go. Oil has surged as much as 35 percent since the middle of February.
Goldman Sachs, a major player in oil markets, thinks crude is overpriced and warned investors that it could be time to sell. OPEC and the International Energy Agency also have said that high prices could be forcing people to reduce driving and cut back on fuel purchases.
While most analysts agree that the world has plenty of oil, supplies are tighter as unrest in Libya keeps most of the oil-rich country's exports offline. Libya supplied about 2 percent of the world oil. And Japan is expected to boost oil imports to make up for power lost from nuclear generators damaged in last month's earthquake and tsunami.
The combination of tighter supplies with increased international demand from big energy consumers like China could keep prices elevated for some time. China is the second biggest user of petroleum behind the U.S.
Cameron Hanover analyst Peter Beutel said in a research note that he doesn't think oil prices have peaked yet. "There has been pain and unhappiness because of higher oil prices, but it has not yet done its worst," Beutel said. "Ultimately, we feel things have to get beyond unacceptable before a real top will be in place."
Benchmark West Texas Intermediate crude for May delivery gained 86 cents to settle at US$107.11 per barrel yesterday on the New York Mercantile Exchange. The contract is still down more than 5 percent for the week.
The Energy Information Administration's weekly supply report did little to clarify where oil prices are headed. The EIA said the nation's crude supplies rose by 1.6 million barrels last week to 359.3 million barrels. That's 1.5 percent above year-ago levels. However, gasoline supplies dropped by 7 million barrels - more than five times what analysts expected. Supplies of distillate fuels, which include diesel and jet fuel, also unexpectedly declined by 2.7 million barrels.
Shrinking supplies of gasoline, diesel and other refined fuels can boost demand for crude, but analyst and trader Stephen Schork pointed out that the drop is partially due to the temporary shutdown of a Sunoco refinery in Pennsylvania.
The EIA said wholesale gasoline demand fell by 1.6 percent when compared with the same period last year. Some analysts see an overall slowdown in American driving in the face of rising gasoline prices. MasterCard SpendingPulse, which tracks spending at 140,000 service stations around the country, said late Tuesday that motorists have bought less gas for six weeks in a row.
In other Nymex trading for May contracts, heating oil gained 3.02 cents to settle at US$3.2028 per gallon, while gasoline futures gained 7.83 cents to settle at US$3.2424 a gallon. Natural gas futures added 4.3 cents to settle at US$4.141 per 1,000 cubic feet.
In London, Brent crude rose US$1.90 to settle at US$122.33 per barrel on the ICE Futures exchange.
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