Oil prices pause within sight of $120

Oil prices pause within sight of $120
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First Published: Thu, Apr 24 2008. 12 48 PM IST
Updated: Thu, Apr 24 2008. 12 48 PM IST
By AFP
Singapore: World oil prices paused within sight of the 120-dollar level on 24 April after a mixed report on US energy stockpiles, dealers said.
In Asian afternoon trading, New York’s main oil futures contract, light sweet crude for delivery in June, slipped 25 cents to $118.05 per barrel. The benchmark contract closed at $118.30 on 23 April at the New York Mercantile Exchange.
The May contract struck a record high of $119.90 before expiring on 22 April. Brent North Sea crude for June delivery dropped 18 cents to $116.28 a barrel, after settling at $116.46 on 23 April in London. It touched an intraday peak of $116.75 a day earlier.
After coming so close, a further rise to $120 is possible, said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.
The US government’s Energy Information Administration (EIA) said on 23 April that American gasoline or petrol reserves sank by 3.2 million barrels in the week ending 18 April.
That was steeper than analysts’ consensus forecasts for a drop of 2.0 million barrels. Traders are focused on gasoline supplies ahead of the peak demand season that starts in May when many Americans take to their cars for summer holidays.
Crude oil stockpiles grew by 2.4 million barrels, EIA said, which was better than market expectations for a gain of 1.5 million.
“The inventories data was overall pretty bullish,” said Dave Ernsberger, Asia director of global energy information provider Platts, in Singapore.
Moore said the EIA report contained “mixed messages” but added that prices are also influenced by a number of supply-side worries.
“Current pricing indicates some underlying tightness in the market,” he said. Phil Flynn at Alaron Trading said earlier that traders hesitated after futures failed to break through the symbolic level of 120 dollars a barrel, easing some fervour.
“After the market had built up all this bullish frenzy it’s almost like the price objective of $120 a barrel seemed to matter more than the fundamentals,” he said.
A weakening US dollar, supply worries and the OPEC cartel’s reluctance to increase output contributed to a surge that saw oil prices break a series of records over the past several days, analysts said. International concern has mounted over the soaring prices.
The world’s fifth-biggest oil exporter Norway said on 23 April it would support a price drop, adding it did not believe there was a problem of supplies.
“We would not regret an oil price at a steady lower level even though it would mean a little less money” for Norway, said undersecretary to the Oil Minister Liv Monica Stubholt. Norway is not a member of the Organisation of the Petroleum Exporting Countries (OPEC) cartel.
Ali al-Naimi the petroleum minister of OPEC’s top producer Saudi Arabia, on 22 April, called for calm in the face of runaway oil prices. He said the world is not running out of oil.
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First Published: Thu, Apr 24 2008. 12 48 PM IST
More Topics: Commodities | Energy | Oil | Price | Dollar |