[QUOTE]Oil fell from the lowest settlement in almost five months in New York before reports that may show U.S. crude stockpiles rose to the highest level in 21 years and Europe’s economy shrank.
Futures slid as much as 0.9 percent, declining for the ninth time in 10 days. [B]U.S. crude stockpiles probably climbed 1.5 million barrels last week to 381 million, the most since August 1990[/B], according to a Bloomberg News survey before government data tomorrow. Europe’s economy contracted last quarter for the first time since the final three months of 2009, a separate survey showed before a report today.
“There’s nothing in the oil market that is giving support,” said Jeremy Friesen, a commodity strategist at Societe Generale in Hong Kong. “Clearly people are going to focus on rising oil stocks in the U.S. It’s expected prices would fall as inventories build to these levels.”
[B]Crude for June delivery fell as much as 87 cents to $93.91 a barrel in electronic trading on the New York Mercantile Exchange [/B]and was at $94.28 at 10:21 a.m. Singapore time. Prices dropped 1.4 percent to $94.78 yesterday, the lowest close since Dec. 19, and are down 4.6 percent this year.
Brent for June settlement slid 45 cents, or 0.4 percent, to $111.12 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was $16.84, compared with $16.79 yesterday and the highest gap based on closing prices since April 13.
U.S. Crude Supplies
U.S. oil stockpiles advanced for an eighth week in the seven days ended May 11, according to the median of nine analyst estimates before the Energy Department report. Supplies at Cushing, Oklahoma, the delivery point for the New York oil contract, are projected to climb to the highest level since the department began tracking inventories at the hub in 2004.
Cushing stockpiles increased before Enbridge Inc. (ENB) and Enterprise Products Partners LP (EPD) reverse shipments on their 150,000-barrel-a-day Seaway pipeline this week. The line may ease a glut of crude in the Midwest by carrying it to refineries on the U.S. Gulf Coast.
U.S. gasoline at the pump fell below year-earlier levels for the fourth straight week. The national average price for regular gasoline dropped 0.9 percent, or 3.6 cents, to $3.754 a gallon from a week earlier, the U.S. Energy Information Administration said in its weekly retail report yesterday. The price was down 5.2 percent from a year earlier and the lowest since Feb. 27, the agency said.
Gasoline for June delivery fell for a fourth day, sliding 1.3 cents, or 0.4 percent, to $2.946 a gallon on the New York Mercantile Exchange today. Prices settled yesterday at the lowest level since Feb. 2.
Oil also slid on concern Europe’s recovery has stalled amid a debt crisis. The region’s economy shrank 0.2 percent in the three months to the end of March, according to the median estimate of 25 economists surveyed by Bloomberg before today’s report. Moody’s Investors Service downgraded 26 Italian banks yesterday, citing weakened earnings and the country’s economic outlook.
Greece, without a government for more than a week and with 10-year debt yields of more than 25 percent, decides today whether to pay 436 million euros ($559 million) to bondholders who shunned a debt swap last month. Talks between the nation’s main parties following May 6 elections have failed to reach agreement on forming a coalition.
Oil investors are “pricing in the risk of a reduction in demand, and doing that against a backdrop now when supply and inventory are fairly comfortable,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “In Greece, it’s a very uncertain outcome. We certainly have to count as a possibility that we could see another crisis of confidence for consumers and investors.”
The European Union accounted for about 16 percent of the world’s oil consumption in 2010, according to BP Plc (BP/)’s Statistical Review of World Energy. The U.S. accounted for 21 percent.
To contact the reporter on this story: Ramsey Al-Rikabi in Singapore at [email]email@example.com[/email]
To contact the editor responsible for this story: Alexander Kwiatkowski at [email]firstname.lastname@example.org[/email]
Stock market is at a 5 month low as well. The world economy is looking weak right now. Oil prices fluctuate due to lots of things but the best predictor is daily output and demand. When demand goes up due to strong world economic activity daily supply needs to go up as well or else the price moves.
There are only two ways that oil prices go down. More supplies come online or economic activity (and fuel consumption by default) declines.
I like that oil prices are coming down but I'm very concerned that the world economy seems to be slowing.
[QUOTE=AlwaysGreenAlwaysWhite;4468602]I went with 'proven' since it's indisputable...
Not a large enough percentage to matter... Take shale for instance... You're talking 2 trillion barrels of the crap that is recoverable... That's obviously not factored into what I'm telling you.[/QUOTE]
Can you post a link, please?
What matters is how many of those 20 billion barrels can be brought to market at under $100 per barrel. That is what really matters.
After all there are many tons of platinum and gold under the USA in the Earth’s inner and outer core but brining that to market would be very costly.