Economic Times - 4/5/2006
Oil prices dipped to $72 a barrel on Thursday, deepening a 3 per cent fall after US data showed an unexpected rise in gasoline inventories.
US light sweet crude traded down 18 cents at $72.10 a barrel by 0338 GMT. It slumped more than $2 a day ago after the higher stock levels soothed concerns about gasoline supply. IPE Brent crude lost 18 cents to $72.47.
Gasoline stocks in the United States rose 2.1 million barrels to 202.7 million barrels in the week to April 28, US Energy Information Administration (EIA) data showed, beating expectations of a modest decline and ending an eight-week falling streak.
The data also showed that gasoline demand of 9.13 million barrels per day (bpd) was unchanged versus last year, despite normal growth of about 2 per cent, although brokers said it was a bit early to conclude that soaring pump prices had hit demand.
"The gasoline build was a little surprising but you need more than one week's data to say we've reached the breaking point for consumers," said John Brady, energy broker at ABN AMRO in New York.
Crude inventories rose 1.7 million barrels while distillate stocks dipped 1.1 million barrels, the data showed. Refinery runs rose 0.6 percentage point to 88.8 per cent of capacity.
Traders have been anxious about gasoline supply in the world's biggest oil consumer since last year's hurricane damaged refineries and in the run-up to a switch to ethanol-blended supplies that some feared could lead to
With the start of the driving season three weeks away and geopolitical risks over Iran and Nigeria still running high, many dealers saw the market shuffling in a $70-$75 band for some time.
"Seasonally we should have a bit of weakness... but anything in the high-$60s may prove to be a good buy comes mid- or late-May," said Brady.
UN debate on Iran will remain in focus for oil traders after Western powers introduced a Security Council resolution on Wednesday demanding that it halt enrichment.
The text does not contain any sanctions, something China and Russia have opposed, but threatens "further measures" if Tehran does not comply.
The foreign ministers of Germany, the United States, Britain, France, Russia and China meet in New York early next week and there is a scant chance that the measure would be adopted before then. Tehran has said repeatedly it will not halt oil exports in the row, but would fight back if attacked