Oil Falls a Second Day After U.S. Gasoline Production Surges
May 18 (Bloomberg) -- Crude oil fell for a second day in New York after a government report showed stockpiles in the U.S. declined less than expected last week and gasoline production leapt to a 10-month high.
Oil inventories shrank 65,000 barrels to 346.9 million, less than a 10th of the decline forecast in a Bloomberg survey of analysts. Gasoline inventories climbed 1.3 million barrels to 206.4 million as refiners increased output for a fifth week and imports were the third highest on record.
``There's plenty of crude stocks and it looks like inventories of gasoline are building OK,'' said David Thurtell, commodity strategist at Commonwealth Bank of Australia Ltd.
Crude oil for June delivery dropped as much as 47 cents, or 0.7 percent, to $68.22 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $68.35 at 9:19 a.m. in Singapore, 45 percent higher than a year ago.
Yesterday, the contract fell 1.2 percent to $68.69, the lowest close since April 12. Prices have fallen 9 percent from the record $75.35 a barrel reached on April 21.
U.S. gasoline stockpiles declined for the eight weeks preceding that record, raising doubts about the ability of the nation's refiners to restore stockpiles before the peak summer driving demand.
Daily gasoline production rose 2.9 percent to an average 9.2 million barrels a day, the highest since the week ended July 1, the Energy Department said yesterday. Daily gasoline imports slipped from a record 1.65 million barrels to 1.45 million barrels last week.
Gasoline Futures
``Gasoline was way ahead of itself and led us higher,'' Michael Fitzpatrick, vice president of energy risk management at Fimat USA Inc. in New York, said yesterday. ``It's now leading us lower. Big oil was being criticized for high prices and has responded by ramping up gasoline production.''
Gasoline for June delivery slipped 0.57 cent to $1.9694 a gallon in after-hours trading. It fell for a fourth session yesterday, declining 2.5 percent to $1.9751, the lowest close since April 5.
Gasoline inventories had been expected to rise 1.5 million barrels, according to the median of 17 responses in a Bloomberg News survey. Crude oil stockpiles were forecast to fall 1 million barrels.
Oil yesterday rose as high as $70.10 after Iran rejected calls for it to stop enriching uranium, a key requirement of a European Union proposal to end the deadlock between the Islamic republic and the United Nations Security Council.
The European Union may offer Iran a nuclear reactor along with trade and other incentives to persuade the country to cease uranium enrichment, officials close to the Vienna-based International Atomic Energy Agency said May 16.
OPEC, U.S. Economy
Prices then plunged more than a $1 a barrel after the Organization of Petroleum Exporting Countries said its member raised output to 29.8 million barrels a day last month, and have 3 million barrels of spare daily capacity.
The slide continued after the U.S. Labor Department reported a stronger-than-expected 0.6 percent rise in April consumer prices. Concerns the U.S. Federal Reserve may raise interest rates further, slowing the world's biggest economy, also pushed gold and metal prices lower.
``If the U.S. economy slows, then the world economy slows and then demand for oil will slow,'' Commonwealth's Thurtell said. ``I'd say it's a minor threat. It would be difficult to say that core inflation is getting out of control.''
Average oil prices almost doubled from 2003 to 2005 as demand in the U.S. and Asia increased faster than production from new fields, narrowing the industry's spare capacity and its ability to cover supply disruptions.
Forecast Demand
World oil demand will rise 1.7 percent to average 84.6 million barrels a day this year, OPEC said in its monthly report yesterday. That's 100,000 barrels a day more than its April estimate, and 230,000 a day less than a May 12 estimate from the International Energy Agency.
``Until I see more solid concrete signs of demand destruction, I'm supportive of a $70 price,'' Bruno Stanziale, director of commodities at Societe Generale in New York said yesterday. ``We have to continue to look at demand numbers which are still in decent shape.''
Low interest rates in the U.S., the world's biggest oil user, have cushioned consumers from rising oil prices the past two years, with home refinancing injecting $200 billion into the economy in 2004, said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut.
``There's a limit as to how long Americans can take equity out of their homes to pay for higher energy prices,'' he said. ``I think we may have reached that point now.''
Gasoline demand in the U.S., the world's biggest oil user, usually peaks during the summer holidays between Memorial Day late May and Labor Day early September.
Implied demand fell 0.2 percent to 9.3 million barrels a day last week, the Energy Department said. Consumption over the past four weeks was up 0.2 percent from a year earlier, it said.
``It's going to be difficult for the level of tension politically to keep this market moving higher,'' if refinery output keeps rising, Beutel said.
May 18 (Bloomberg) -- Crude oil fell for a second day in New York after a government report showed stockpiles in the U.S. declined less than expected last week and gasoline production leapt to a 10-month high.
Oil inventories shrank 65,000 barrels to 346.9 million, less than a 10th of the decline forecast in a Bloomberg survey of analysts. Gasoline inventories climbed 1.3 million barrels to 206.4 million as refiners increased output for a fifth week and imports were the third highest on record.
``There's plenty of crude stocks and it looks like inventories of gasoline are building OK,'' said David Thurtell, commodity strategist at Commonwealth Bank of Australia Ltd.
Crude oil for June delivery dropped as much as 47 cents, or 0.7 percent, to $68.22 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $68.35 at 9:19 a.m. in Singapore, 45 percent higher than a year ago.
Yesterday, the contract fell 1.2 percent to $68.69, the lowest close since April 12. Prices have fallen 9 percent from the record $75.35 a barrel reached on April 21.
U.S. gasoline stockpiles declined for the eight weeks preceding that record, raising doubts about the ability of the nation's refiners to restore stockpiles before the peak summer driving demand.
Daily gasoline production rose 2.9 percent to an average 9.2 million barrels a day, the highest since the week ended July 1, the Energy Department said yesterday. Daily gasoline imports slipped from a record 1.65 million barrels to 1.45 million barrels last week.
Gasoline Futures
``Gasoline was way ahead of itself and led us higher,'' Michael Fitzpatrick, vice president of energy risk management at Fimat USA Inc. in New York, said yesterday. ``It's now leading us lower. Big oil was being criticized for high prices and has responded by ramping up gasoline production.''
Gasoline for June delivery slipped 0.57 cent to $1.9694 a gallon in after-hours trading. It fell for a fourth session yesterday, declining 2.5 percent to $1.9751, the lowest close since April 5.
Gasoline inventories had been expected to rise 1.5 million barrels, according to the median of 17 responses in a Bloomberg News survey. Crude oil stockpiles were forecast to fall 1 million barrels.
Oil yesterday rose as high as $70.10 after Iran rejected calls for it to stop enriching uranium, a key requirement of a European Union proposal to end the deadlock between the Islamic republic and the United Nations Security Council.
The European Union may offer Iran a nuclear reactor along with trade and other incentives to persuade the country to cease uranium enrichment, officials close to the Vienna-based International Atomic Energy Agency said May 16.
OPEC, U.S. Economy
Prices then plunged more than a $1 a barrel after the Organization of Petroleum Exporting Countries said its member raised output to 29.8 million barrels a day last month, and have 3 million barrels of spare daily capacity.
The slide continued after the U.S. Labor Department reported a stronger-than-expected 0.6 percent rise in April consumer prices. Concerns the U.S. Federal Reserve may raise interest rates further, slowing the world's biggest economy, also pushed gold and metal prices lower.
``If the U.S. economy slows, then the world economy slows and then demand for oil will slow,'' Commonwealth's Thurtell said. ``I'd say it's a minor threat. It would be difficult to say that core inflation is getting out of control.''
Average oil prices almost doubled from 2003 to 2005 as demand in the U.S. and Asia increased faster than production from new fields, narrowing the industry's spare capacity and its ability to cover supply disruptions.
Forecast Demand
World oil demand will rise 1.7 percent to average 84.6 million barrels a day this year, OPEC said in its monthly report yesterday. That's 100,000 barrels a day more than its April estimate, and 230,000 a day less than a May 12 estimate from the International Energy Agency.
``Until I see more solid concrete signs of demand destruction, I'm supportive of a $70 price,'' Bruno Stanziale, director of commodities at Societe Generale in New York said yesterday. ``We have to continue to look at demand numbers which are still in decent shape.''
Low interest rates in the U.S., the world's biggest oil user, have cushioned consumers from rising oil prices the past two years, with home refinancing injecting $200 billion into the economy in 2004, said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut.
``There's a limit as to how long Americans can take equity out of their homes to pay for higher energy prices,'' he said. ``I think we may have reached that point now.''
Gasoline demand in the U.S., the world's biggest oil user, usually peaks during the summer holidays between Memorial Day late May and Labor Day early September.
Implied demand fell 0.2 percent to 9.3 million barrels a day last week, the Energy Department said. Consumption over the past four weeks was up 0.2 percent from a year earlier, it said.
``It's going to be difficult for the level of tension politically to keep this market moving higher,'' if refinery output keeps rising, Beutel said.
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