Wednesday June 27, 2:11 pm Eastern Time
Oil Price Clobbered As Fuel Supplies Brim
biz.yahoo.com
By Timothy Gardner
NEW YORK (Reuters) - U.S. petroleum futures took a beating on Wednesday after weekly supply reports showing gasoline stocks at nine-year seasonal highs deepened fears that a slowing economy is weakening fuel demand.
August gasoline futures on the New York Mercantile Exchange briefly hit a new 17-month low of 71.50 cents a gallon, a loss of more than 6 cents a gallon. Gasoline futures have fallen 40 percent in the last month on signs that wider economic downturn is slicing into demand growth. The losses pushed August West Texas Intermediate crude futures briefly to a 14-month low of $25.20 per barrel, down $1.79, or more than 4 percent, after both government and industry data showed a 10th straight weekly build in gasoline stocks.
Fuel supplies have rocketed higher after sparkling profit margins earlier this year encouraged refiners to pump flat out. Gasoline stocks are now at their highest level since 1992 for the corresponding week, according to Ron Planting, statistician with the American Petroleum Institute, while spring gasoline production has hit its highest level ever. ``This market is being dragged lower by product builds,'' said Tom Bentz, analyst at BNP Paribas Commodity Futures Inc. The price slide means drivers will be enjoying better gasoline prices over the July 4 holiday weekend.
Softer gasoline futures have pushed down gasoline prices at retail pumps 17 cents from record highs last month of an average of $1.55 per gallon, according to the American Automobile Association. Crude price weakness dims chances that the Organization of Petroleum Exporting Countries will raise oil production at its extraordinary meeting in Vienna on July 3. OPEC scheduled the meeting to decide whether it needed to increase output to make up for lost supplies from Iraq. Baghdad halted exports on June 4 because the OPEC member dislikes an Anglo-American effort at the United Nations to revamp decade-old sanctions against it.
On Tuesday, Russian Foreign Minister Igor Ivanov said Moscow would block the planned sanctions overhaul, leaving traders guessing as to whether Iraq will resume its exports, which comprise 5 percent of the 75 million barrel per day global market. The U.N. is to reopen debate on revised sanctions on Thursday and must vote on a draft resolution by a July 3 deadline. Oil traders have moved to secure tankers for Iraqi oil in mid-July in case Baghdad resumes exports. Heating oil futures also tanked 2.69 cents to 70.50 cents per gallon as reports from both the API and the Energy Information Administration, the statistics arm of the Energy Department, showed distillates stocks rose 2.1 million barrels. |
