Crude oil futures fall
VIENNA, Austria (AP) – Crude oil futures prices fell Thursday as traders weighed stubbornly low supplies of heating oil in the United States against steadily rising inventories of crude. In a mildly bearish outlook, OPEC cut its estimate of growth in world demand for next year, down 120,000 barrels to 1.49 million barrels a day, in its monthly oil report. It attributed the lowered demand to slower growth in the world’s economies.
Light, sweet crude for December delivery fell 62 cents to $46.22 per barrel on the New York Mercantile Exchange. The price is nearly $9 cheaper than the peak closing price of $55.17 set twice in late October.
But heating oil futures rose 1.86 cents to $1.43 per gallon on traders’ fears that winter fuel supplies will be tight.
On Wednesday, the Energy Department reported that U.S. supplies of oil rose for the eighth consecutive week, while inventories of distillate fuel, which includes heating oil, diesel and jet fuel, fell for the ninth straight week.
Crude inventories stand at 292.3 million barrels, or slightly higher than year-ago levels, while the supply of distillate fuel is at 114.6 million barrels, or 14 percent below year ago levels.
Frederic Lassere, head of commodities research for SG Securities in Paris, said part of the problem was high demand for diesel and jet fuel. “Diesel consumption is so big that it is swallowing much of the distillate production,” he said.
With full winter appetite for heating oil likely to set in within the next two weeks, “we are running out of time” to build inventories, he said.
However, the pre-winter oil supply fears that gripped the market in September and October have dissipated significantly as inventories continue to grow, thanks to high levels of imports and rising production in the Gulf of Mexico, where output had been hobbled for weeks following Hurricane Ivan.
As of Thursday, more than 30 million barrels of oil production had been lost in the Gulf of Mexico since mid-September, and daily output in the region is still 12 percent below normal.
While Nymex crude futures prices are about 50 percent higher than a year ago, they would have to reach $90 per barrel to meet the inflation-adjusted peak set in 1980.
Markets have been on the edge all year over its limited excess production capacity and strong demand, primarily from growth in China.
The excess capacity situation leaves little room to move if there is a prolonged production problem in any of the key exporters.
“There might be other outages, so we are not out of the woods yet,” said Kurt Barrow, senior principal at Texas-based energy analysts Purvin & Gertz in Singapore.
But the Organization of Petroleum Exporting Countries signaled that market tightness might be easing, saying it expected to sell about 28.2 million barrels a day over this quarter and the next – a drop of 2 million barrels a day compared to October.
In other Nymex trading, gasoline futures fell 1.77 cent to $1.2383 per gallon, while natural gas futures dropped by 41 cents to $6.873 after government data showed pre-winter storage fell slightly but continues to be abundant.
In London, Brent crude futures climbed 4 cents to $42.72 per barrel on the International Petroleum Exchange.
AP-ES-11-18-04 1614EST