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Oil settles below US$84 as supplies increase
Source: Agencies |
April 22, 2010, Thursday
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OIL prices slid yesterday, holding below US$84 a barrel after the government said U.S. oil and gas supplies grew more than expected last week.
Benchmark crude for June delivery gave up 17 cents to settle at US$83.68 a barrel on the New York Mercantile Exchange. In London, Brent crude added 90 cents to settle at US$85.70 a barrel on the ICE futures exchange.
Prices plunged shortly after the Energy Information Administration report. Analysts said it provided more evidence that oil prices have outpaced energy demand.
Crude contracts, which are 80 percent more expensive than 12 months ago, have been a concern throughout the energy industry. The increase seems to be tracking the dollar and the direction of stocks on Wall Street, not American energy demand. As rising oil prices make gasoline and other fuels more expensive, analysts have wondered how consumers will respond.
"The economy is improving, but consumers have started to walk away from gasoline at prices they cannot afford," analyst Stephen Schork said in his daily oil report. "Bottom line, North American and European consumers are going to be hard pressed this summer to pay the premium Wall Street is forcing" on them.
The EIA reported that the nation's oil supply grew last week to 355.9 million barrels and gas supplies rose to 3.6 million barrels. Both are above average for this time of year.
The report also said that motorists are burning more gasoline than last year, but demand hasn't increased enough to cut into the huge surplus that built up during the recession.
Meanwhile, last week's volcanic eruption in Iceland appears to have made a sizable impact on the consumption of jet fuel. The giant plume of ash and debris halted air traffic in many European cities.
Flights have resumed across much of Europe as the ash cloud shifted away and skies began to clear. U.S. energy consultancy Cameron Hanover said jet fuel demand dropped by an estimated 42 percent to 700,000 barrels a day.
In other Nymex trading in May contracts, heating oil rose 2.56 cents to settle at US$2.2058 a gallon and gasoline added less than a penny to settle at US$2.2827 a gallon. Natural gas lost 2 cents to settle at US$3.955 per 1,000 cubic feet.
Benchmark crude for June delivery gave up 17 cents to settle at US$83.68 a barrel on the New York Mercantile Exchange. In London, Brent crude added 90 cents to settle at US$85.70 a barrel on the ICE futures exchange.
Prices plunged shortly after the Energy Information Administration report. Analysts said it provided more evidence that oil prices have outpaced energy demand.
Crude contracts, which are 80 percent more expensive than 12 months ago, have been a concern throughout the energy industry. The increase seems to be tracking the dollar and the direction of stocks on Wall Street, not American energy demand. As rising oil prices make gasoline and other fuels more expensive, analysts have wondered how consumers will respond.
"The economy is improving, but consumers have started to walk away from gasoline at prices they cannot afford," analyst Stephen Schork said in his daily oil report. "Bottom line, North American and European consumers are going to be hard pressed this summer to pay the premium Wall Street is forcing" on them.
The EIA reported that the nation's oil supply grew last week to 355.9 million barrels and gas supplies rose to 3.6 million barrels. Both are above average for this time of year.
The report also said that motorists are burning more gasoline than last year, but demand hasn't increased enough to cut into the huge surplus that built up during the recession.
Meanwhile, last week's volcanic eruption in Iceland appears to have made a sizable impact on the consumption of jet fuel. The giant plume of ash and debris halted air traffic in many European cities.
Flights have resumed across much of Europe as the ash cloud shifted away and skies began to clear. U.S. energy consultancy Cameron Hanover said jet fuel demand dropped by an estimated 42 percent to 700,000 barrels a day.
In other Nymex trading in May contracts, heating oil rose 2.56 cents to settle at US$2.2058 a gallon and gasoline added less than a penny to settle at US$2.2827 a gallon. Natural gas lost 2 cents to settle at US$3.955 per 1,000 cubic feet.
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