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US oil supplies increase as OPEC boosted production { June 28 2002 } Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=a1Uw6b0KYgNU&refer=homehttp://quote.bloomberg.com/apps/news?pid=10000006&sid=a1Uw6b0KYgNU&refer=home
Crude Oil Falls More Than $1 to Seven-Week Low as Supply Surges
April 13 (Bloomberg) -- Crude oil fell more than $1 a barrel to a seven-week low after an Energy Department report showed that U.S. inventories climbed for a ninth consecutive week as OPEC boosted production.
U.S. supplies rose 3.7 million barrels to 320.7 million last week, the highest since the week ended June 28, 2002, the report showed. The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world's oil, boosted production quotas last month in an effort to lower prices that threatened global economic growth and long-term fuel demand.
This ``could be the death knell of the frenzy that sent us to records a few weeks ago,'' said Jason Schenker, an analyst with Wachovia Corp. in Charlotte. ``This is a further sign that we are well supplied.''
Crude oil for May delivery fell $1.31, or 2.5 percent, to $50.55 a barrel at 12:39 p.m. on the New York Mercantile Exchange. Prices touched $50.36, the lowest since Feb. 22. Futures surged to $58.28 on April 4, the highest since trading began in 1983. Oil is 36 percent higher than a year ago.
In London, the May Brent crude-oil futures contract fell $1.13, or 2.2 percent, to $50.85 a barrel on the International Petroleum Exchange. Brent futures touched $50.60, the lowest since March 2. Prices are down 12 percent from the record $57.65 a barrel reached on April 4.
Crude oil futures are in a situation known as ``contango'' in which the prompt contract is lower than the months that follow. The lower price for May crude oil may encourage refiners to increase inventories for use in later months.
`Price Frenzy'
U.S. Federal Reserve Chairman Alan Greenspan said on April 5 that rising inventories may ease the ``current price frenzy'' that sent oil to a record.
U.S. stockpiles have climbed by 26.4 million barrels, or 9 percent, in the last nine weeks. Inventories rose for 12 weeks last autumn after a hurricane closed refineries and delayed the arrival of imports along the U.S. Gulf Coast. An increase of 400,000 barrels was forecast, according to the median of responses by 16 analysts before the report.
``There is nothing in the report for the bulls to hold on to,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts. ``With OPEC producing as much as they are we can expect imports to rise in coming weeks.''
OPEC produced 29.9 million barrels a day in March, up 5.2 percent from a year earlier, according to Bloomberg data. OPEC raised its production target by 500,000 barrels a day on March 16 and said it would consider another 500,000 barrels.
Gasoline stockpiles rose 848,000 barrels to 213 million, the first increase in six weeks. Analysts were split on whether gasoline inventories rose or fell last week.
Confidence Boost
``The report gives us confidence that we'll be able to meet demand for gasoline this summer,'' Mueller said. ``Fear of gasoline shortages helped move us this high.''
Gasoline for May delivery fell 3.48 cents, or 2.3 percent, to $1.499 a gallon in New York. Prices are down 14 percent from a record $1.7491 touched on April 4. Gasoline futures are 30 percent higher than a year ago.
Retail gasoline prices have gained as refiners pass on higher oil costs. Pump prices for regular grade gasoline, averaged nationwide, fell 0.2 cent to $2.264 a gallon yesterday, according to the AAA, formerly the American Automobile Association. Prices touched a record $2.276 a gallon on April 8.
U.S. retail sales rose less than forecast in March as higher gasoline prices crimped consumers' willingness to spend. The 0.3 percent increase followed a 0.5 percent February gain, the Commerce Department said today in Washington. Sales were forecast to rise 0.8 percent, based on a Bloomberg News survey.
Higher energy costs will probably reduce Americans' incomes by at least $55 billion at an annual rate in the first half of the year, according to a forecast by Richard Berner, chief U.S. economist at Morgan Stanley in New York. Economists at Morgan Stanley said first-quarter growth may be closer to 3.2 percent than the 3.4 percent pace they were forecasting yesterday.
Last Updated: April 13, 2005 12:54 EDT
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