By Thomas Hogue / AP
Singapore: Oil prices dropped below $124 a barrel in Asia after the U.S. government issued a mixed report on the country’s petroleum reserves.
The Energy Department said diesel stockpiles there rose last week, and news of the build eased concerns about the fuel used to transport most food and consumer goods. The government also said crude oil inventories were up, but not by as much as expected.
Light, sweet crude for June delivery fell 46 cents to $123.76 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell $1.58 to settle at $124.22 a barrel on 14 May.
In its report, the Energy Department’s Energy Information Administration said inventories of distillates, which include heating oil and diesel fuel, grew 1.4 million barrels last week, 27% more than expected. A big draw in the fuel reported a week ago was one of the key factors keeping oil on the record run begun 5 April.
However, the EIA also said crude inventories grew just 200,000 barrels, much less than the 2.5 million barrel jump analysts surveyed by research firm Platts had expected, and that gasoline demand fell slightly over the last four weeks.
The EIA reported as well that gasoline supplies fell 1.7 million barrels last week, a little bit more than double what analysts had been expecting. Still, gasoline price fell because of the weakening demand.
“There’s no incentive for refiners to make (gasoline) because they’re not selling it,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Also pressuring oil prices overnight and Thursday was the dollar, which has strengthened against the euro and yen. Commodities such as oil lose their appeal as inflation hedges when the dollar rises. Also, a stronger greenback makes oil more expensive to investors overseas.
In other Nymex trading, heating oil futures rose 0.13 cent to $3.6191 a gallon (3.8 liters) while gasoline prices fell 1.4 cents to $3.1664 a gallon. Natural gas futures fell 1.9 cents to $11.579 per 1,000 cubic feet.
In London, June Brent crude fell 61 cents to $121.25 a barrel on the ICE Futures exchange.