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oil prices slump as us supply fears ease Oil prices slump as US supply fears ease
AAP News
6:38:020 25/05/2006
by Antoine Agasse
NEW YORK, May 24, 2006 AFP - World oil prices slid nearly two
dollars a barrel on Wednesday after official data revealed a jump
in stockpiles of US gasoline last week, analysts said.
But traders said there were still market tensions over major oil
producer Iran, as world powers met in London to debate a strategy
aimed at forcing the Islamic republic to stop enriching uranium.
New York's main contract, light sweet crude for delivery in
July, shed 1.90 dollars to close at 69.86 dollars a barrel.
In London, Brent North Sea crude for July delivery settled at
69.22 dollars a barrel, down 1.78 dollars.
US stockpiles of crude oil fell in the week to May 19 but
closely watched levels of gasoline (petrol) increased, the
Department of Energy said.
It said crude oil reserves declined by three million barrels to
343.9 million, three times the fall expected by analysts.
But reserves of gasoline, which are in focus ahead of the US
summer driving season, rose 2.1 million barrels to 208.5 million.
That was more than the predicted increase of 1.3 million barrels.
The United States is gearing up for its peak-demand season for
gasoline, beginning over this weekend's Memorial Day break, when
Americans traditionally take to the roads for a vacation.
Societe Generale analyst Deborah White said the solid data was
evidence that the United States, the world's biggest consumer of
energy, was set to avoid potential supply problems going into the
driving season.
"The gasoline problem is absolutely behind us," she said.
However, AG Edwards analyst Bill O'Grady noted other DoE figures
which showed that US refiners were running at a capacity rate of
89.7 percent last week, barely changed from 89.8 percent in the
week before.
"We continue to be amazed at the low level of run rates," he
said.
"The damage wrought by last year's hurricanes continues to weigh
on the refining sector.
"However, soft demand growth and robust imports appear to be
keeping inventories at reasonable levels. We would still expect
runs to lift as the summer wears on."
The drop in oil prices came a day after they closed up nearly
two dollars in New York, as forecasts of a potentially devastating
Atlantic hurricane season prompted fears of new damage to US Gulf
Coast petroleum installations.
Last year, hurricanes Katrina and Rita devastated oil refineries
and rigs along the US Gulf Coast, sending oil prices to then-record
highs.
Iran's ongoing row with the West over its nuclear research
programme was also keeping the market on edge.
The White House on Wednesday vowed there would be no direct
negotiations with Tehran unless it suspends uranium enrichment,
which Western powers suspect is being diverted to make nuclear
weapons.
"Iran has to take that fundamental step when it comes to
enriching and reprocessing uranium -- they've got to suspend all
activities," White House spokesman Tony Snow told reporters.
Snow's pronouncement came as the permanent members of the UN
Security Council and Germany met in London on the Iran nuclear
crisis.
Senior officials from Britain, China, France, Russia, the United
States and Germany were said to be making progress on a European
carrot-and-stick package aimed at breaking Iran's determination to
enrich uranium.
Iran insists that its nuclear programme is strictly for civilian
energy production. Analysts say that any UN sanctions on Iran could
prompt the oil-rich nation to cut its exports, threatening global
crude supply.
AFP