LONDON, Oct 14: World oil prices fell heavily on Friday as a report on crude stockpiles in the United States suggested weakening demand in the world’s biggest energy consumer, analysts said.
New York’s main contract, light sweet crude for delivery in November, shed $1.38 to $61.70 per barrel in pit trading.
In London, the price of Brent North Sea crude for November delivery dropped 84 cents to $59.30 per barrel in electronic deals before expiry of the contract at Friday’s close.
Data from the US Department of Energy (DoE) had shown on Thursday that inventories of refined products had fallen more strongly than expected but that demand had also softened.
“The bullishness of the figures was however countered by demand data showing that gasoline demand for the past four weeks fell 2.4 per cent from a year ago, while distillate demand was down four per cent,” said Sucden analyst Sam Tilley.
“The price of Brent had been rising all week on expectations of rising demand growth next year, but in the short term it looks as though the high oil prices are denting demand, sufficiently to prevent the market heading back towards 70 dollars.”
The DoE data showed that gasoline (petrol) inventories had dropped by 2.7 million barrels in the week ending October 7, compared with analysts’ predictions of a drop of 1.1 million barrels.
Distillates, including heating oil, also fell strongly by 3.4 million barrels compared with expectations of a 1.8-million-barrel decline.
Crude stockpiles had risen by one million barrels, less than the 1.7 million barrels expected by analysts.
Societe Generale analyst Deborah White added: “The key to this week’s DoE figures is the deepening demand destruction signalled by week-on-week changes in deliveries of light (refined) products.”
Demand for gasoline was stagnant, falling 0.6 per cent from the previous week, while demand for distillates fell 3.1 per cent and kerosene collapsed nearly 20 per cent, White said.
“It is too soon to say that the figures ... confirm (the) bearish DoE prediction of ‘significant demand destruction’ forecast for fourth-quarter US product demand,” she added.
The fourth quarter signals the start of winter in the northern hemisphere, a time of heavy demand for heating fuel, especially in the United States.
Meanwhile, seven US Gulf Coast refineries remained out of action owing to damage from hurricanes.—AFP
