Oil Slips from Record, Hovers Near $57
Reuters | April 5, 2005
LONDON - Oil prices slipped on Tuesday to just below $57 a barrel as speculators took profits from the peak of a day earlier and traders predicted rising crude stocks in the United States.
U.S. light crude traded 37 cents lower to $56.64 , down from Monday's $58.28 all-time high. London's Brent crude dipped 19 cents to $56.04 a barrel, off Monday's record at $57.65.
U.S. crude is about 30 percent above levels at the end of 2004 on concerns that strong growth in global consumption is straining world supplies to the limit.
"$60 is still within easy reach, all we need are some bad U.S. inventory figures or a refining outage," said David Thurtell, a commodities strategist at Commonwealth Bank of Australia in Sydney.
U.S. crude stocks are running at a near three-year high and analysts are predicting another rise in stocks of 2.3 million barrels when the government Energy Information Administration (EIA) releases fresh data on Wednesday for the week to April 1.
EIA data last week showed U.S. commercial crude tanks swelled by 5.4 million barrels to almost 315 million in the week to March 25.
But oil traders are closely watching U.S. gasoline stocks ahead of peak demand season in the summer, which kicks off at the Memorial Day holiday at the end of May and stretches to the Labor Day weekend in September.
While U.S. gasoline supplies are also running at a surplus, strong demand and recent refinery problems have raised concerns about potential shortfalls.
Eleven analysts polled by Reuters predicted U.S. gasoline inventories would fall by an average 1.6 million barrels in this week's EIA data due to healthy demand.
"If there's not enough gasoline as we go into summer, then it's off to the races," said Mark Waggoner, president of Excel Futures Inc. in Huntingdon Beach, California.
So far high prices do not appear to have cut into U.S. consumer thirst for fuels such as gasoline, diesel and jet fuel.
PRESSURE ON OPEC
EIA figures last week showed U.S. demand for refined products up 2.3 percent from a year ago at 20.7 million barrels per day (bpd) -- one quarter of global consumption -- based on a four-week average.
The latest rally has piled pressure on the OPEC producers' cartel to increase supplies to the global 84 million barrel-per-day (bpd) market, despite burgeoning crude stocks in the United States, the biggest oil consumer.
OPEC oil ministers have begun telephone consultations over a possible output rise of 500,000 bpd to cool prices, OPEC President Sheik Ahmad al-Fahd al-Sabah said on Monday.
"...If there will be any new production, it should be in May," Sheik Ahmad said.
The Organization of the Petroleum Exporting Countries raised output limits by 500,000 bpd to 27.5 million bpd in mid-March and left room for a second increase before a June meeting if oil failed to ease below $55.
Acting Secretary-General Adnan Shihab-Eldin said on Monday OPEC, excluding Iraq , had lifted output by 300,000-500,000 bpd in March versus February, and added that demand for the group's crude was lower than supply "by a big margin."