MELBOURNE: Oil fell in New York, heading for a second weekly drop, on concern that Europe’s debt crisis will worsen and curb fuel demand as global crude supplies increase.
Futures slipped as much as 1.4%, retreating for the seventh day in eight. OPEC is producing 8.3% more crude than it considers necessary this quarter, data released yesterday by the Vienna-based group showed. Prices narrowed their declines after the International Energy Agency said today global oil markets are marginally tighter and predicted that geopolitical risks to crude supply will keep prices high.
“The recent correction is to do with the broader risk-off mode,” Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London.
“We had been building up to a correction as a result of higher OPEC supply and a whole string of crude inventory gains in the U.S. But fundamentals are sufficient to maintain the price above US$95.”
Crude for June delivery fell as much as US$1.34 to US$95.74 a barrel in electronic trading on the New York Mercantile Exchange, and was at US$96.15 at 12:49 p.m. London time. The contract yesterday rose 27 cents to US$97.08. Prices are 2.4% lower this week and down 2.8% this year.
Brent oil for June settlement slipped 78 cents, or 0.7%, to US$111.95 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at US$15.80, compared with US$15.65 yesterday.
U.S. crude stockpiles rose 3.7 million barrels last week to 379.5 million, the highest level since 1990, Energy Department data showed May 9. Total fuel demand averaged over the four weeks ended May 4 fell 0.5% to 18.7 million barrels a day, down 0.8% from a year earlier.(Bloomberg/T03/aph)