MARKET WATCH: NYMEX oil prices down on higher oil stocks
Energy prices generally decreased Apr. 1, with benchmark light, sweet crudes for May contracts settling below $49/bbl on the New York market in response to a US government report of rising oil inventories.
OGJ Senior Staff Writer
HOUSTON, Apr. 2 -- Energy prices generally decreased Apr. 1, with benchmark light, sweet crudes for May contracts settling below $49/bbl on the New York market in response to a US government report of rising oil inventories.
The US Energy Information Administration reported US commercial crude inventories increased 2.8 million bbl to 359.4 million bbl for the week ended Mar. 27 (OGJ Online, Apr. 1, 2009).
Separately, International Energy Agency Chief Nobuo Tanaka on Apr. 2 said IEA is likely to lower its global oil demand projects again because the International Monetary Fund recently cut its 2009 world economic growth forecast.
"More demand revisions cannot be ruled out," Tanaka told an energy conference in Paris. The IEA currently sees oil demand falling by 1.2 million b/d to 84.4 million b/d this year.
Weaker oil demand is pushing down oil prices. The Organization of Petroleum Exporting Countries Secretary General Abdalla Salem el-Badri said OPEC can deal with current oil prices.
"I think we can live with prices of around $50[/bbl] for the time being," el-Badri said, adding, "The world economy is in very bad condition."
The global economic slump is contributing to falling industrial oil demand and rising unemployment rates. Consequently, more oil is going into storage.
The US received more negative economic news Apr. 2 when the US Department of Labor reported new unemployment claims rose to a 26-year high of 669,000 for the week ended Mar. 28.
Meanwhile, leaders of the world's largest economies met Apr. 2 in London for the opening of the G20 summit. Analysts said any economic decisions at the summit could influence oil demand and commodity prices.
The immediate impact was that oil prices on the New York market rise above $50/bbl in early trading Apr. 2, which analysts attributed to expectations that the G20 meeting could find a way to help restore global growth.
The May contract for benchmark US light, sweet crudes dropped $1.27 to $48.39/bbl Apr. 1 on the New York Mercantile Exchange. The June contract lost $1.17 to $50.20/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., dropped by $1.27 to $48.39/bbl. Heating oil for May settled 2.21¢ lower, finishing at an average $1.3458/gal on NYMEX. The contract for reformulated blend stock for oxygenate blending (RBOB) for the same month dropped by 4.96¢ to $1.3717/gal.
The May natural gas contract lost 8¢ to $3.70/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 2.5¢ to $3.58/MMbtu.
In London, the May IPE contract for North Sea Brent crude dropped by 79¢ to $48.44/bbl. Gas oil for April, however, fell $5.75 to $414.25/tonne.
The average price for OPEC's basket of 12 reference crudes rose 53¢ to $47.18/bbl on Apr. 1.
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