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Oil falls below 50 in april yet pump prices sour { April 28 2005 } Original Source Link: (May no longer be active)
http://money.cnn.com/2005/04/28/markets/oil.reut/?cnn=yeshttp://money.cnn.com/2005/04/28/markets/oil.reut/?cnn=yes
Oil rises after toying with $50 a barrel
Prices recover after data on GDP, growing crude supplies and gasoline stocks drag prices down.
April 28, 2005: 3:28 PM EDT
LONDON (Reuters) - Oil prices rebounded from a three-day drop Thursday, after dipping below $50 a barrel during the day, on fears that high prices have slowed economic growth in the United States and on burgeoning crude oil stocks.
U.S. light crude for June delivery rose 16 cents to $51.77 a barrel, having fallen as low as $49.80 in early trading. On Wednesday, prices dropped almost 5 percent after government data showed a big rise of 5.5 million barrels in crude inventories.
London's Brent crude also inched higher, climbing 26 cents to $52.55 a barrel.
The economy grew at its softest pace in two years during the first quarter of this year, slowing to a 3.1 percent annual rate of expansion as consumers and businesses curbed spending in the face of rising prices, the Commerce Department said Thursday.
The growth was below Wall Street expectations for a 3.5 percent pace.
A slowdown in economic activity would cap U.S. oil demand growth, which has been a key factor in record high oil prices over the past year.
The GDP data added further momentum to a sharp slide this week, sparked by signs that OPEC exporters have made good a pledge to increase world supplies and a rise in U.S. crude stocks.
U.S. light crude is over $6, or 11 percent, below the record $58.28 struck on April 4.
Plentiful global crude oil supplies have led to concerns that oil markets could see further falls.
"Downward pressure is building into a tremendous head that needs to be released by either higher crude demand or a collapse in prices," said Deutsche Bank in a report.
"The next month will give us the answer... and with still more high volumes of oil already on its way from Saudi Arabia, this one will play out before Saudi can defend us by cutting if we continue to head downward."
OPEC producers said this week they were doing all they could to fully supply the market in a bid to cool prices that have averaged $50.85 a barrel so far this year, an increase of 17 percent since the end of 2004.
The prolonged rally, which saw oil rise by one-third last year, has raised concerns that high commodity prices are starting to dent world economic growth by fueling inflation and prompting a rising trend in global interest rates.
Oil supplies rising
In its latest report for the week to April 22, the Energy Information Administration said the nation's commercial crude stocks were 324.4 million barrels, 9 percent above a year ago and the highest level since May 31, 2002.
The rise, which far exceeded analysts' forecasts of a 400,000-barrel increase, came as imports into the world's biggest oil consumer surged to 10.9 million barrels per day (bpd), the third highest daily rate on record.
Less than a month before the start of the summer driving season, gasoline inventories were running at the top end of the range for the time of year.
Stocks of the motor fuel were 4.6 percent above last year's levels. But refinery hitches and demand growth in the U.S. have seen the surplus above last year more than halved.
At the beginning of March, gasoline stocks were over 10 percent above the year earlier.
"It is products that continue to give some cause for concern," said David Stedman, head of research at Daiwa.
"The gap between gasoline stocks this year and last is narrowing... we could be looking ahead to a painful period for U.S. motorists."
U.S. gasoline on the New York Mercantile Exchange was trading up 81 cents at $1.5460 a gallon, over 11 percent below the all-time peak at $1.7491 earlier in April.
The U.S. consumes over a third of the world's gasoline, and demand continues to grow. The EIA said average four-week demand for motor fuel was 9.2 million bpd, 1.5 percent above last year.
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