Crude Oil Rises on Concern U.S. Imports May Fail to Meet Demand
May 5 (Bloomberg) -- Crude oil rose in New York for a second day on
speculation producers may not be able to meet peak demand later this
year when U.S. refiners increase production of heating fuel before the
winter.
Oil rebounded from a two-month low yesterday on concern that OPEC and
other suppliers are already pumping at capacity at a time when demand
is typically at a seasonal low. Oil imports fell 5.6 percent last week
according to a U.S. Energy Department report yesterday.
``This is just one week's report,'' said Mike Armbruster, co- founder
of Altavest Worldwide Trading Inc. in Laguna Hills, California. ``We
are in a long-term bull market and the current correction is simply a
buying opportunity.''
Crude oil for June delivery rose as much as 58 cents, or 1.2 percent,
to $50.71 a barrel in after-hours electronic trading on the New York
Mercantile Exchange. It was at $50.48 at 9:05 a.m. in Singapore.
Yesterday, the June contract rose 63 cents, or 1.3 percent, to $50.13
a barrel. Prices initially fell as low as $48.80, the lowest since
Feb. 22, after the U.S. Energy Department report showed
bigger-than-expected increases in the country's oil and gasoline
stockpiles last week.
Oil supplies rose for the 11th week in 12 to 327 million barrels. The
2.68 million-barrel increase was twice the 1.3 million gain expected,
based on the median forecast from a Bloomberg survey of 16 analysts.
Gasoline inventories rose 2.2 million barrels to 213.5 million last
week, the highest in a month and the first gain in three weeks. An
875,000-barrel increase was expected.
Gasoline
Oil and gasoline prices surged to a record last month on concern
stockpiles were not rising fast enough to meet U.S. summer driving
demand, which usually peaks after the Memorial Day holiday late May.
``Today's reversal on bearish news signals the beginning of higher
demand season for gasoline,'' said James Cordier, president of Liberty
Trading Group, a St. Petersburg, Florida, futures broker.
World oil consumption will climb 2.1 percent this year and will peak
at 86.1 million barrels a day in the fourth-quarter, the International
Energy Agency said last month.
Average gasoline demand this year is already 1.5 percent higher than a
year earlier, based on U.S. Energy Department data. The department's
estimates of shipments from refiners to wholesalers and regional
buyers show that gasoline stockpiles last week would provide 23 days
of supply, barely changed from a year earlier.
Gasoline for June delivery rose 0.96 cent, or 0.7 percent, to $1.4753
a gallon in after-hours trading on the exchange. It gained 0.5 percent
yesterday.
OPEC
Oil futures have declined 13 percent since reaching $58.28 a barrel on
April 4, the highest since the contract began in 1983.
Oil supplies have risen the past month after the Organization of
Petroleum Exporting Countries, which pumps 40 percent of the world's
oil, raised its production quota to lower prices and swell global
stockpiles before demand peaks in the fourth-quarter.
OPEC agreed at a meeting in Isfahan, Iran, on March 16 to boost its
daily quota by 500,000 barrels to 27.5 million barrels. Members
pledged to add another 500,000 barrels if prices rise and demand
warrants the extra supply. OPEC will next meet on June 15 in Vienna.
The group's production, including Iraq, which is not restricted by a
quota, last month rose to 30.1 million barrels a day, according to the
survey of oil companies, producers and analysts. It was the most oil
that members have pumped since 30.54 million barrels a day in October,
the highest since 1979, based on U.S. Energy Department records.
Bloomberg estimates OPEC has excess production capacity of 2.15
million barrels a day. If Iraq is excluded, because sabotage makes the
country an unreliable source of oil, the total falls to 1.6 million
barrels a day, or about 2 percent of world demand.
To contact the reporter on this story:
Sri Jegarajah in Singapore at sjegarajah@bloomberg.net;
Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net
Last Updated: May 4, 2005 21:23 EDT |
