Oil Prices Fall Below $49 Per Barrel
Wednesday May 4, 10:45 am ET
By George Jahn, Associated Press Writer
Oil Prices Fall Below $49 a Barrel As U.S. Supplies of Crude Oil, Gasoline Rise
VIENNA, Austria (AP) -- Oil prices fell below $49 a barrel Wednesday after the U.S. government released data that showed rising supplies of crude oil and gasoline.
Light, sweet crude for June was down 70 cents at $48.80 in early trade on the New York Mercantile Exchange.
"Expectations are that both crude and product stocks are going to rise -- that means even higher stocks that already are very high" in the world's greatest energy consuming nation, said analyst Ehsan Ul-Haq of Vienna's PVM energy consultants. "Prices are going down all over the world, but most severely in the West."
The latest petroleum supply snapshot from the U.S. Department of Energy showed a 2.6 million barrel increase in crude oil last week, bringing the nation's inventories to 327 million barrels, or 9 percent above year ago levels.
The supply of gasoline grew by 2.2 million barrels to 213.5 million barrels, or 6 percent above year ago levels.
The downward pressure on prices also has to do with slower economic growth in the United States.
The U.S. Federal Reserve raised interest rates Tuesday to curb spending as overall consumer prices spiked by 0.6 percent in March, driven by expensive gasoline and energy products. The move could slow growth in the world's largest economy, reducing demand for oil, traders said.
"One reason oil prices got hit hard last week was the barrage of weaker-than-expected macroeconomic reports," said Phil Flynn, an analyst with Chicago-based Alaron Futures and Options, on the firm's Web site. "Traders started thinking it would be difficult for oil demand to remain strong if the economy softened."
Crude supplies in the United States have risen in recent weeks, but concern remains over the country's gasoline stocks ahead of the summer driving season.
Although crude futures have fallen by more than $9 since their all-time high of $58.28 in early April, prices remain around 30 percent higher than a year ago.
On Tuesday, the Paris-based International Energy Agency urged nations to diversify energy supplies and reiterated its warning that persistently high oil prices are "a drag on economic activity and growth."
"Today's prices demand actions to stimulate and diversify energy supply and curb demand," the IEA said.
Associated Press Writers Brad Foss in Washington and En-Lai Yeoh in Singapore contributed to this report. |
