LONDON, April 27: World oil prices fell on Wednesday as traders digested a sharp rise in United States crude stocks and a smaller-than-expected drop in gasoline reserves, easing market concerns about a supply crunch. New York’s main contract, light sweet crude for delivery in June, dipped $1.70 to $52.50 per barrel in early deals.
In London, the price of Brent North Sea crude oil for delivery in June shed $1.11 to $53.03 per barrel, after dropping to $52.75 on publication of the data.
“It’s nice to see a good build in US stocks, so hopefully there might be some further downward price movement taken on the back of that,” said analyst Veronica Smart of the Energy Information Centre.
The US Department of Energy (DoE) said crude stockpiles for the week ending April 22 increased 5.5 million barrels to 324.4 million barrels, against Wall Street expectations for a rise of just 650,000.
The private-sector American Petroleum Industry, compiling its own figures supplied by brokers, reported an increase of 4.66 million barrels to 324.66 million.
“The initial market reaction was bullish because the crude stock build was so much better than we expected,” Societe Generale analyst Deborah White said.
But “the gasoline draw was only half expectations”, she added.
The DoE reported that gasoline stockpiles had fallen 300,000 barrels to 211.3 million over the week, against a predicted drop of 1.2 million barrels, easing supply concerns.
Gasoline, or petrol, was in focus ahead of the US summer driving season — when many Americans take to the roads for holidays — traditionally starting on the US Memorial Day holiday on May 30.
“Even though crude oil and gasoline inventories are better than expected, the strong demand is still a factor affecting the market,” Smart cautioned.
Prices had begun falling on Tuesday following a meeting between US President George Bush and Saudi Arabian Crown Prince Abdullah bin Abdul Aziz that focused on oil prices.
The two parties emerged from their talks on Monday with no short-term fix but urged markets to consider a Saudi plan to hike its oil output capacity to 12.5 million barrels per day (bpd) from 2010 and possibly up to 15 million bpd if needed.
“The kingdom is currently producing slightly over 9.5 million bpd, with between 1.3 and 1.4 million bpd in spare production capacity that can be quickly tapped,” Sucden analysts said.—AFP
