Oil Falls From Two-Month High on Speculation Stockpiles Gained
By Alexander Kwiatkowski and Christian Schmollinger
Oil fell from a two-month high in New York on speculation U.S. stockpiles gained last week because of lower demand in the world’s largest crude consumer.
Crude oil inventories climbed 1 million barrels in the week ended March 13 from 351.3 million barrels, according to estimates in a Bloomberg survey before an Energy Department report tomorrow. Oil also dropped as European stocks fell for the first time in six days.
“We have very high crude oil inventories in the U.S.” said Sintje Diek, an HSH Nordbank analyst in Hamburg. “We still have very weak oil demand. We will remain in this trading range of $45 to $50 a barrel for the coming weeks.”
Crude oil for April delivery fell as much as 82 cents, or 1.7 percent, to $46.53 a barrel in electronic trading on the New York Mercantile Exchange. It was at $47.10 a barrel at 9:22 a.m. London time.
Yesterday, April futures rose $1.10 to $47.35 a barrel, the highest settlement since Jan. 6. Prices have gained 5.1 percent this year. Crude in New York tumbled from a record $147.27 a barrel in July because of the economic contraction in major consuming countries.
European stocks fell after American Express Co. reported rising credit-card defaults. Europe’s Dow Jones Stoxx 600 Index dropped 2 percent to 171.22 at 8:47 a.m. in London, ending a five-day, 9.6 percent surge.
The Organization of Petroleum Exporting Countries deferred another production cut for at least 11 weeks at its weekend meeting. OPEC has reduced daily output targets by 4.2 million barrels since September to prevent a glut and slow the decline in prices. The group is scheduled to meet again on May 28.
Brent Crude
Brent crude oil for May settlement fell as much as $1.24, or 2.7 percent, to $45.22 a barrel, and was trading at $45.97 on London’s ICE Futures Europe exchange at 9:23 a.m. in London.
Saudi Arabia, the world’s biggest oil exporter, is the only member to cut more output than agreed last year, according to a monthly OPEC report released on March 13. Iran and Nigeria have made good on only about half of their promised reductions, the report showed.
Saudi Arabia is willing to keep oil output below its OPEC quota level of about 8 million barrels a day unless consumers want more, Saudi Arabian Oil Minister Ali al-Naimi said yesterday.
“Maybe we will see even lower prices because OPEC decided not to make further cuts,” said Diek of HSH Nordbank. “Maybe compliance is not enough.”
source: Bloomberg
