Oil heads for second weekly drop as supply exceeds demand
Baku, May 11 (AZERTAC). Oil fell in New York, heading for a second weekly drop, on concern Europe`s debt crisis will worsen and curb fuel demand as global crude supplies increase, Bloomberg reports. Futures slipped as much as 1.4 percent, retreating for the seventh day in eight. Oil may extend declines next week amid rising U.S. stockpiles and concern the crisis in Europe will spread, threatening the global economic recovery, according to a Bloomberg survey. OPEC is producing 8.3 percent more crude than it considers necessary this quarter, data released yesterday by the Vienna-based group showed. “The outlook remains mixed to negative and I think that`s the state of play for a little while,” said Jonathan Barratt, chief executive of Barratt`s Bulletin, a commodity-markets newsletter in Sydney. “The optimism we had at the end of 2011 that created a firm footing for a lot of commodities has slowly eroded. We still continue to see inventory builds.” Crude for June delivery fell as much as $1.34 to $95.74 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.03 at 4:14 p.m. Singapore time. The contract yesterday rose 27 cents to $97.08. Prices are 2.5 lower this week and down 2.8 percent this year. Brent oil for June settlement slipped 92 cents, or 0.8 percent, to $111.81 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract`s premium to West Texas Intermediate was at $15.78, from $15.65 yesterday.
Eleven of 23 analysts surveyed by Bloomberg, or 48 percent, forecast oil will drop through May 18. Nine respondents, or 39 percent, predicted prices will be little changed and three estimated there will be a gain. U.S. crude stockpiles rose 3.7 million barrels last week to 379.5 million, the highest level since 1990, Energy Department data showed May 9. Total fuel demand averaged over the four weeks ended May 4 fell 0.5 percent to 18.7 million barrels a day, down 0.8 percent from a year earlier. Greece has been unable to form a government since May 6 elections, raising the possibility that another vote will have to be held as early as next month. Spain`s government took control of the nation`s fourth-biggest lender this week as it starts its fourth bank cleanup in three years. Iraq, seeking to more than double oil output by 2015, is poised to overtake Iran as the Organization of Petroleum Exporting Countries` second-largest producer by the end of the year as sanctions hobble crude production in its Persian Gulf neighbor. Iraq produced 3.03 million barrels a day in April, 7.7 percent more than in March, while Iranian output fell to 3.2 million a day, according to an OPEC monthly report yesterday.
OPEC, responsible for 40 percent of global oil supplies, bolstered production by 320,000 barrels a day in April to 31.62 million, it said in its report. Saudi Arabia, the world`s largest oil exporter, increased supply by 56,500 barrels a day to 9.9 million, according to OPEC, whose estimates are based on secondary sources including analysts and news agencies. The group will cut shipments by 1.8 percent this month as refiners in Asia conduct seasonal maintenance, according to Oil Movements, a tanker tracker. OPEC will export 23.96 million barrels a day in the four weeks to May 26, compared with 24.39 million in the period to April 28, the researcher said yesterday in a report. The data exclude shipments by Angola and Ecuador. China cut its oil processing to the lowest level in six months in April amid refinery maintenance and slowing fuel demand. Refining fell to 9.03 million barrels a day last month, the least since October, according to Bloomberg calculations from a statement by the National Bureau of Statistics in Beijing today. Oil in New York has technical support along its 200-day moving average, about $96.27 a barrel today, according to data compiled by Bloomberg. Futures have traded lower than this indicator every day this week without settling below it. Crude`s 14-day relative strength index is at 29.6, the lowest since August. A reading below 30 signals prices have fallen too quickly and further losses may not be sustained.
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