Crude Oil Slides to 6-Week Low as U.S. Gasoline Supplies Rise
By Thomas Tugendhat
London, May 30 (Bloomberg) -- Crude oil fell to a six-week low after an unexpected increase in U.S. gasoline inventories at the start of the summer travel season.
Gasoline storage rose 1.4 percent, to 218 million barrels in the week ended Friday, the American Petroleum Institute said yesterday. The supply of fuel is now 6 percent more than last year's level. Analysts surveyed by Bloomberg before the report had expected a drop of 500,000 barrels as drivers prepared for the U.S. Memorial Day holiday.
``Gasoline inventories are ample for this time of year and it is unlikely there will be a supply crunch,'' said Bruce Evers, an analyst at Investec Henderson Crosthwaite.
Brent crude oil for July settlement fell as much as 69 cents, or 2.7 percent, to $24.45 a barrel on the International Petroleum Exchange in London. High supplies have depressed the price of Brent, the benchmark for two-thirds of the world's oil, to 16 percent lower than a year ago.
In the U.S., crude oil for July delivery fell as much as 69 cents, or 2.7 percent, to $25.7 a barrel in electronic trading on the New York Mercantile Exchange.
Gasoline for June delivery fell 2 cents, or 2.5 percent, to 75.3 cents a gallon in overnight trading on the Nymex. That's the lowest price for 1 1/2 months.
Rising supplies at the world's biggest energy consumer come at a time when Russia, the world's second-biggest crude oil producer after Saudi Arabia, said last week it will boost exports by 15 percent in the third quarter. Increased output from Russia reduces concern about possible supply disruptions from Middle East nations which supply a third of the world's oil.
Crude Stockpiles
U.S. crude oil stockpiles declined 0.7 percent week, or 2.4 million barrels, the third fall in four weeks, indicating refiners produced more fuel and petroleum products. More than 90 percent of the decline was in the isolated West Coast region of the U.S.
In the refinery-rich Gulf Coast, which includes, Louisiana and Texas, crude supplies rose by 155,000 barrels.
U.S. refiners operated at 92.3 percent of overall capacity last week, up from 91.4 percent the week before.
The American Automobile Association had predicted that 29.3 million people would make car trips of 50 miles or more during the holiday weekend, up 2 percent from last year.
The association's numbers ``seemed a little optimistic,'' said Stan Sheetz, president of Sheetz Inc. in Altoona, Pennsylvania, which sells more than a billion gallons of gasoline a year at 275 service stations in five mid-Atlantic states. ``They didn't come to fruition or we would have seen a big increase in sales.''
No OPEC Increase
Saudi Arabia, Iran and Venezuela, OPEC's three-largest oil producers, want to keep output quotas unchanged when the group meets in Vienna next month, the group's secretary-general said.
``The important producers'' in the Organization of Petroleum Exporting Countries ``are of the view that production should be kept unchanged,'' Ali Rodriguez told reporters in Qatar at the start of tour of the Persian Gulf. ``There's a little oversupply in the market,'' said Rodriguez, who has recently been made head of Venezuela's state-owned Petroleos de Venezuela SA.
Oil demand this year will rise at half the average rate of the 1990s, after last year posting the smallest gain in two decades, the International Energy Agency said, two weeks ago. Oil prices in London are up about 25 percent this year at $24.55 a barrel, mostly because of violence between Israel and the Palestinians and OPEC's cutbacks, analysts have said.
Venezuelan Cheating
Venezuela boosted oil output by 8 percent this month, exceeding its quota and increasing the whole group's supply even as oil prices fell, an industry consultant said.
OPEC's third-largest seller raised supply by 200,000 barrels to 2.68 million barrels a day, 7.3 percent more than its ceiling, said Conrad Gerber of PetroLogistics Ltd., which tracks oil shipments. That lifted OPEC production, excluding Iraq, to 22.94 million barrels a day, 140,000 more than a revised April estimate.
Venezuelan President Hugo Chavez, who survived a coup attempt in April, is facing a projected state budget deficit of at least 6 percent of gross domestic product, or $6 billion. His need for oil income may undermine the tightest OPEC production targets in a decade, analysts said. |
