Oil prices sink after US energy report

AFP
NEW YORK
Petroleumworld.com 01 26 06

World oil prices fell sharply on Wednesday following news of rising distillates and gasoline stockpiles in the United States, the world's biggest energy consumer, dealers said.

New York's main contract, light sweet crude for delivery in March, sank 1.21 dollars to close at 65.85 dollars a barrel.

In London, the price of Brent North Sea crude for March delivery plummeted 1.11 dollars to a close of 64.23 dollars a barrel.

Crude futures on Monday had breached 69 dollars in New York for the first time in more than four months on global supply concerns linked to Nigeria and Iran.

But they have since fallen strongly on profit-taking caused largely by an offer from Saudi Arabia to supply more crude if necessary.

The decline accelerated after the US Department of Energy published its weekly inventories report on Wednesday. Increases in gasoline and distillates stocks were both around three times higher than market expectations.

Supplies of distillate products, used to make heating fuel and diesel, rose 1.8 million barrels to 136.5 million in the week ended January 20, the DoE said.

Reserves of motor gasoline, or petrol, were up 3.2 million barrels over the week at 214.8 million.

US crude stocks fell 2.3 million barrels to total 319.1 million barrels. But the level is still "well above the upper end of the average range for this time of year", the DoE said.

Warmer-than-expected temperatures in the United States have depressed demand for heating fuel, according to analysts. Demand normally peaks during the northern hemisphere winter.

"We had bearish gasoline numbers. The products led the market," PFC Energy analyst Jamal Qureshi said.

But he added: "We're still tight. One bearish week doesn't change the overall picture.

"Nigeria and Iran continue to be bullish elements in the market. That's part of the reason why we couldn't go down too far."

The offer of more crude from Saudi Arabian Oil Minister Ali al-Nuaimi came after supply disruptions in Africa's biggest oil exporter Nigeria and a nuclear standoff between the West and Iran -- the world's fourth-biggest crude producer.

Al-Nuaimi said Monday in an interview with Indian television that his country, the world's top oil exporter, was ready to boost supplies to 11 million barrels per day from 9.5 million.

Oil producer Indonesia said Wednesday that the Organization of Petroleum Exporting Countries (OPEC) should maintain its current output levels as prices are likely to stay high due to the tensions over Iran's nuclear ambitions.

Energy Minister Purnomo Yusgiantoro said Indonesia would ask the OPEC cartel, which pumps about 40 percent of the world's oil, not to cut the group's production level at its next meeting on January 31 in Vienna.

"On a fundamental basis, oil prices should ease in the second quarter, but it seems they will stay high because of geopolitical problems in Iran," he said.

Also on Wednesday, China suggested it was not a major factor behind high global oil prices, as it announced that its net imports of crude and refined oil fell last year even as economic growth boomed.

The nation's net imports of crude and refined oil dropped 5.3 percent year-on-year in 2005, according to Li Deshui, the director of the National Bureau of Statistics.

"Some people say that China imports too much oil, and that demand is voracious, causing the global rise in oil prices," he told a briefing in Beijing.

"But I'd like to tell you that in 2005, China's net imports of crude and refined oil not only did not rise, but actually fell by 5.3 percent."

AFP 01/25/06

Copyright © 2006 AFP. All rights reserved

 

 

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