MARKET WATCH�Energy futures, IEA demand outlook, May 11

Energy futures prices ended Wednesday's trading with mixed results on the New York Mercantile Exchange, as profit-taking, combined with a bearish inventory report by API, pushed down crude futures but other prices retained more strength. Crude oil for June delivery pulled back 55�/bbl, settling at $28.10/bbl, while the July contract stood at $28.05, down 35�. Meanwhile, IEA's latest forecast indicates continued oil market tightness.


Energy futures prices ended Wednesday's trading with mixed results on the New York Mercantile Exchange, as profit-taking, combined with a bearish inventory report by the American Petroleum Institute, pushed down crude futures but other prices retained more strength.

Crude oil for June delivery pulled back 55�/bbl, settling at $28.10/bbl, while the July contract stood at $28.05, down 35�. Refined products closed mixed, with June heating oil rising by 1.9�/gal to finish at 73.28�/gal, while unleaded gasoline for the same month lost 3.86�, ending at 91.20�. Nymex natural gas for June delivery rose by 13.4� to $3.32/MMbtu.

Prices had risen significantly during the last couple of trading sessions, prompting profit-takers to enter the rings with sell orders. Many players believed that the last few sessions had taken prices to an unreasonably high level and that the time had come to sell.

On the other hand, the API released bearish stocks' data for the previous week, after Tuesday's session. Crude oil stocks rose unexpectedly by 4.14 million bbl to 304.14 million bbl. However, gasoline inventories declined by 850,000 bbl to 201.61million bbl. The decline in gasoline stocks was lower than expected. Heating oil, meanwhile, defied the trend, according to some traders because of moves by one major buyer.

Meanwhile, in London Wednesday, North Sea Brent crude oil futures were lower on the International Petroleum Exchange. IPE June Brent settled at $26.42/bbl, down by 40� from the previous day's close, while the July contract was lower by 16� at $26.27.

In Asia trading May 11, a widely expected correction in the price of North Sea Brent crude oil took place today on the Singapore Exchange. Traders attributed the slide to technical factors after the high prices of the past 2 months.

"We are still seeing prices in a higher-than-expected range, and they will have to be softened in the coming sessions," said a trading house source in Singapore. As the day ended, Singapore Brent for June was down by 40� to $26.42/bbl, while the July contract fell 16� to $26.27.

The price of the Organization of Petroleum Exporting Countries (OPEC) basket of seven crudes stood at $26.38 bbl Wednesday, compared with $26.61 the previous day, according to OPEC secretariat calculations.

One source said prices again were moving into the $26 bbl-plus range on speculation that OPEC wouldn't sanction another increase in output at its June ministerial talks. But he speculated that consumers are generally looking to the June meeting for OPEC to provide more relief by bringing the price into the $23-24 bbl range.

IEA demand data
The latest market report from the International Energy Agency sheds some light on current market fundamentals.

Global demand for oil has eased, in conjunction with a rise in supply at the start of the second quarter, alleviating the tightness in oil supplies and modifying projections for the demand-supply balance, said IEA. Nevertheless, demand is expected to pick up next month, and "demand growth from June onwards is expected to tilt the balance back to a tighter market."

In April, global demand eased by 200,000 b/d to 75.76 million b/d from a month earlier, and this trend is expected to continue into May. Projections for demand this month were put at 73.01million b/d, down by 2.75 million b/d from April demand. But IEA forecasts world demand in June to rebound to 76.50 million b/d, up by 3.50 million b/d from a month earlier. That strengthening of demand is set to continue until the end of the year.

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