Oil Falls from Record Peaks But Near $57 ($56.64/bbl)

Reuters ^ | April 5, 2005 | Tanya Pang

[RWR8189]

SINGAPORE (Reuters) - Oil prices slipped on Tuesday to just below $57 a barrel as speculators took profits from record peaks a day earlier and on prospects of rising crude supplies in the United States as well as from OPEC producers.

U.S. light crude traded 29 cents lower to $56.72 bringing losses from Monday's $58.28 all-time high to $1.56, or 2.7 percent. London's Brent crude dipped 3 cents to $56.20 a barrel, 2.5 percent off Monday's record at $57.65.

Despite the pull back, U.S. crude is about 30 percent above levels at the end of 2004 on concerns that strong growth in global consumption is straining world supplies close to the limits.

"$60 is still within easy reach, all we need are some bad U.S. inventory figures or a refining outage," said David Thurtell, a commodities strategist at Commonwealth Bank of Australia in Sydney.

U.S. crude stocks are running at a near three-year high and analysts are predicting another rise in stocks of 2.3 million barrels when the government Energy Information Administration (EIA) releases fresh data on Wednesday for the week to April 1.

EIA data last week showed U.S. commercial crude tanks swelled by 5.4 million barrels to almost 315 million in the week to March 25.

But oil traders are closely watching U.S. gasoline stocks ahead of peak demand season in the summer, which kicks off at the Memorial Day holiday at the end of May and stretches to the Labor Day weekend in September.

While U.S. gasoline supplies are also running at a surplus, strong demand and recent refinery problems have raised concerns about potential shortfalls.

Eleven analysts polled by Reuters predicted U.S. gasoline inventories would fall by an average 1.6 million barrels in this week's EIA data due to healthy demand.

"If there's not enough gasoline as we go into summer, then it's off to the races (with oil prices)," said Mark Waggoner, president of Excel Futures Inc. in Huntingdon Beach, California.

But so far high prices do not appear to have cut into U.S. consumer thirst for fuels such as gasoline, diesel and jet fuel.

PRESSURE ON OPEC

EIA figures last week showed U.S. demand for refined products up 2.3 percent from a year ago at 20.7 million barrels per day (bpd) -- one quarter of global consumption -- based on a four-week average.

The latest rally has piled pressure on the OPEC producers' cartel to increase supplies to the global 84 million barrel-per-day (bpd) market, despite burgeoning crude stocks in the United States, the biggest oil consumer.

OPEC oil ministers have begun telephone consultations over a possible output rise of 500,000 bpd to cool prices, OPEC President Sheikh Ahmad al-Fahd al-Sabah said on Monday.

"...If there will be any new production, it should be in May," Sheikh Ahmad said.

The Organization of the Petroleum Exporting Countries raised output limits by 500,000 bpd to 27.5 million bpd in mid-March and left room for a second increase before a June meeting if oil failed to ease below $55.

Acting Secretary-General Adnan Shihab-Eldin said on Monday OPEC, excluding Iraq, had lifted output by 300,000-500,000 bpd in March versus February, and added that demand for the group's crude was lower than supply "by a big margin."

"If OPEC raises output and world stocks start to build strongly in the next few months, I think oil's going to struggle," Thurtell of Commonwealth Bank said.

[RWR8189]

4/05/05 Session Contract Detail for May 2005

	Last				56.64
	Open High				0.00
	Open Low				0.00
	High				56.96
	Low				56.53
	Settle				57.01
	Change				-0.37
	Open Interest				227215
	Volume				0
	Last Updated				4/05/05 05:17:34

[Truth666]

Attention: to all freepers that fighted against the murder of Terri

The more the truth is obvious to the average idiot the greater the deception is served to the average idiot

[MAEsser]

Truth666: Perhaps I'm less than an average idiot. How does your post on Terri relate to oil?

Can someone help me to understand the dynamics of the oil futures market? Has anyone speculated that someone like Soros has his hands in the rise in oil prices? Was it not the Russians who kept oil prices lower during the past couple of years? What has happened with Russian oil supply? Also, what is the current production of renewable-fuels, like ethanol? Could that be boosted to help meet demand?

The story also quotes that US fuel demand eats up 1/4 of the global daily supply. How much of that is gasoline consumption? What is the breakdown of US fuel consumption?

[Truth666]

"What has happened with Russian oil supply?"
Peaked February 2005.

[TheBattman]

So - in 21 months, the price of oil has basically doubled. I just don't believe all the supply/demand mumbo-jumbo. That would indicate that a scarcity of major proportions.

Somebody somewhere is pocketing insane profits at the cost of consumers. Nothing wrong with profit, except when it is gained through fraud and deceit which I am firmly convinced is the case here. Global supplies are not drastically down. Consumption has not doubled in the last 21 months. I believe that prices are being manipulated - and I solidly put the blame on Saudi Arabia and it's cartel of international crime bosses.

I remember reading right here on FR a few years back about how oil prices at the time were too low to make it profitable to supply our own oil needs - or even to significantly produce oil here. Well - if oil at it's current price wouldn't be profitable to produce, something is wrong. Yet, other than ANWAR, what efforts are underway to bolster our domestic production?

And yes, I know that the enviro-nazi crowd bears some blame - but not for doubled oil prices and gasoline prices that are headed to that same figure.

I am truly getting concerned at what the current trend in fuel prices is going to do to our strengthening economy picture. I also find it difficult to believe that the prices have put no dent in consumer demand for fuel. Most people I know have curtailed driving habits, cut extra driving, parking their gas-drinking machines as much as possible.

[TheForceOfOne]

I have posted this link before, but it still holds water.

Rumor Mill Makes Oil
http://www.nypost.com/business/22329.htm