The decline in oil prices can be attributed to adequate gasoline supplies in US to meet summer driving demand and the various nations’ pledge to continue negotiations on Iran’s nuclear research.
A US Energy Department report today likely will show that gasoline stockpiles remain above the five-year average, according to a Bloomberg News survey of analysts. US motor fuel prices have gained 13 % this month after fires and power interruptions trimmed refinery output in the US and Canada.
“From the fundamental side, I see no reason at the moment to go much higher from here,” said Gerrit Zambo, an oil trader at Bayern LB in Munich. Traders expect the US benchmark crude, West Texas Intermediate, to stay “in a range between $57 and $60,” he said.
Crude oil for April delivery fell as much as 46 cents, or 0.8 %, to $59.61 a barrel on the New York Mercantile Exchange and traded at $59.70 at 1:06 p.m. London time.Analysts and oil traders are monitoring the dispute between the US, its allies and Iran, OPEC’s second-largest oil producer, because military conflict in the region may disrupt oil supplies from the Middle East.
“I can’t think that it would be right to take military action against Iran,” British Prime Minister Tony Blair said in a BBC radio interview. “What is important is to pursue the political, diplomatic channel. It is the only sensible way we’re going to get a solution to the issue.”
The US says Iran’s work on uranium enrichment will allow construction of a nuclear bomb. Iran has said it needs enriched uranium to make fuel for a nuclear power plant being built by Russia.
Oil rose 3.4 % to $60.07 a barrel yesterday in New York in part because Valero Energy Corp., the largest US refiner, said output will not resume at the McKee refinery in Sunray, Texas, for several weeks. The 170,000 barrel-a-day plant was shut after a fire 16 February.
Teppco Partners LP said yesterday that a pipeline shut Feb. 20 after a leak in Indiana may be operating again on the weekend. The pipeline can carry 240,000 barrels a day of refined petroleum products and is part of a system running from the Gulf Coast into Pennsylvania and the Northeast.
“It’s too early to say that the gasoline balance will be tight in the summer time,” said Tetsu Emori, chief commodities strategist for Mitsui Bussan Futures Ltd. in Tokyo. “There was too much of a focus on the refinery closures.”Brent oil for April settlement fell as much as 48 cents, or 0.8 %, to $58.87 a barrel on the ICE Futures exchange in London and traded at $59.13 at 1:09 p.m.
Analysts were split over whether US gasoline supplies rose or fell last week, according to a survey of 12 analysts by Bloomberg News before the Energy Department report today.
Inventories probably fell 50,000 barrels in the week ended 16 February from 225.2 million in the prior week, according to the survey. Six respondents expected a decline and six said inventories rose. Gasoline supplies were 3.7 % above the five-year average on 9 February.US gasoline use usually peaks during the country’s summer vacation season between Memorial Day in late May and Labor Day in early September.
Gasoline for March delivery fell 0.33 cents to $1.7014 a gallon in New York at 1:11 p.m. London time. Stockpiles of distillate fuel, including heating oil and diesel, declined 2.88 million barrels in the week ended 16 February from 133.3 million the prior week, according to the survey. Crude- oil stockpiles probably climbed 1.05 million barrels from 323.9 million barrels the prior week.The U.S. Energy Department is scheduled to release its weekly report today at 10:30 a.m. in Washington, a day later than usual because of the 19 February President’s Day holiday.