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Oil settles lower as report shows ample supplies
Source: Agencies |
April 8, 2010, Thursday
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OIL prices eased back yesterday on a report showing crude inventories grew more than expected last week and that supplies of gasoline were still well above average.
Benchmark crude for May delivery fell 96 cents to settle at US$85.88 a barrel on the New York Mercantile Exchange. The contract rose 22 cents to settle at US$86.84 on Tuesday after hitting an 18-month high of US$87.09 a barrel.
Oil might be due for a break. Crude prices have jumped from US$69 in early February on signs that the global economy is gaining strength and demand for gasoline and diesel fuel will rise.
Retail gasoline prices have moved up to highs last seen in October 2008.
Oil prices have climbed even as supplies remained high and demand for gasoline and other products was lukewarm.
Crude supplies rose for the week ended Friday by a bigger-than-expected 2 million barrels while gasoline stocks declined by 2.5 million barrels, according to the Energy Information Administration. Supplies of both remain well above average.
Over the past four weeks, gasoline demand has averaged 9 million barrels per day, an increase of 1.7 percent from a year ago. Demand for distillate fuel used for heating oil and diesel fuel has been flat and jet fuel demand is off 3.7 percent.
Demand for oil from manufacturers continued to show strength, up 15 percent over the four weeks from last year. It's an indication that factories may be gearing up as the nation's economy recovers.
Crude has started to act like it did in 2008 when prices continued to push higher even though demand fell off as the Great Recession took hold. Prices peaked that July at US$147 a barrel and gasoline topped US$4 per gallon (US$1.05 a liter).
"The only difference is that we still have very high unemployment and that the unemployment is persistent," said oil analyst and trader Stephen Schork.
High unemployment levels have contributed to weak gasoline demand, and analysts worry that US$3 per gallon (79 cents a liter) gasoline can stall the economic recovery.
In other Nymex trading in May contracts, heating oil lost 2.44 cents to settle at US$2.2439 a gallon, and gasoline gave up 3.36 cents to settle at US$2.3147 a gallon. Natural gas fell 7.7 cents to settle at US$4.019 per 1,000 cubic feet.
In London, Brent crude dropped 56 cents to settle at US$85.59 on the ICE futures exchange.
Benchmark crude for May delivery fell 96 cents to settle at US$85.88 a barrel on the New York Mercantile Exchange. The contract rose 22 cents to settle at US$86.84 on Tuesday after hitting an 18-month high of US$87.09 a barrel.
Oil might be due for a break. Crude prices have jumped from US$69 in early February on signs that the global economy is gaining strength and demand for gasoline and diesel fuel will rise.
Retail gasoline prices have moved up to highs last seen in October 2008.
Oil prices have climbed even as supplies remained high and demand for gasoline and other products was lukewarm.
Crude supplies rose for the week ended Friday by a bigger-than-expected 2 million barrels while gasoline stocks declined by 2.5 million barrels, according to the Energy Information Administration. Supplies of both remain well above average.
Over the past four weeks, gasoline demand has averaged 9 million barrels per day, an increase of 1.7 percent from a year ago. Demand for distillate fuel used for heating oil and diesel fuel has been flat and jet fuel demand is off 3.7 percent.
Demand for oil from manufacturers continued to show strength, up 15 percent over the four weeks from last year. It's an indication that factories may be gearing up as the nation's economy recovers.
Crude has started to act like it did in 2008 when prices continued to push higher even though demand fell off as the Great Recession took hold. Prices peaked that July at US$147 a barrel and gasoline topped US$4 per gallon (US$1.05 a liter).
"The only difference is that we still have very high unemployment and that the unemployment is persistent," said oil analyst and trader Stephen Schork.
High unemployment levels have contributed to weak gasoline demand, and analysts worry that US$3 per gallon (79 cents a liter) gasoline can stall the economic recovery.
In other Nymex trading in May contracts, heating oil lost 2.44 cents to settle at US$2.2439 a gallon, and gasoline gave up 3.36 cents to settle at US$2.3147 a gallon. Natural gas fell 7.7 cents to settle at US$4.019 per 1,000 cubic feet.
In London, Brent crude dropped 56 cents to settle at US$85.59 on the ICE futures exchange.
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