Crude Futures Fall on Energy Report
Wednesday April 13, 6:02 am ET
By Wee Sui Lee, Associated Press Writer
Crude Futures Fall on Energy Watchdog's Bearish Report; Saudis Increase Output in Asia
SINGAPORE (AP) -- Crude futures dropped Wednesday after the International Energy Agency forecast slower growth in oil demand this year.
Traders are also looking ahead at the midweek U.S. Department of Energy petroleum supply report out later Wednesday, which they expect will show another increase, even with the summer driving season only weeks away.
Light, sweet crude for May delivery fell 40 cents to $51.46 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Europe. Heating oil prices fell more than a cent to $1.4538 a gallon, while unleaded gasoline futures fell more than a cent as well, to $1.5210 a gallon.
On the International Petroleum Exchange in London, Brent crude fell 60 cents to $51.38 a barrel.
"The IEA report raised doubts about demand expectations. The market was ready to bounce back up and the bulls were confident that demand would be strong," said analyst Phil Flynn at Chicago-based Alaron Trading Corp. on its Web site. "Now they are losing that confidence. The bulls are jumping ship."
In its report, the Paris-based IEA suggested that rising U.S. interest rates and energy costs would reduce global demand growth for oil this year by 50,000 barrels a day to 1.77 million barrels a day. The global energy watchdog also said slowing Chinese oil demand growth might dampen crude prices further.
"Fears of a surge in second-quarter Chinese demand are receding," the IEA said, as it noted that China's oil demand growth was significantly lower in the first two months of the year.
Crude futures have been sliding since last week on a build in crude stocks in the United States and comments from the Organization of Petroleum Exporting Countries on a possible production increase next month.
In Venezuela, Oil Minister Rafael Ramirez said the cartel's newly proposed production increase of 500,000 barrels daily may not be needed before summer, claiming the market is already well-supplied. Venezuela, like other price hawks, is opposed to raising output over fear it may drive down prices.
But the benchmark commodity remains around 37 percent higher than a year ago and reached an all-time intraday high of $58 per barrel last week.
Analysts said Saudi Arabia and fellow Middle East producers are keen to boost output now to encourage stock-building in the coming months, creating a buffer for strong demand later this year.
Elsewhere, officials from Saudi Aramco, the world's biggest oil company by output, were also reported to have told key Asian buyers Tuesday it was boosting May supplies to full contractual volumes for the first time since December as it increases production. |
