U.S. crude oil futures ended lower for the fourth session in a row last Friday, May 14, and extended losses for the second straight week on concerns the euro zone recovery may be stifled and amid high U.S. oil inventories. On the New York Mercantile Exchange, June crude <CLM0> settled down US$2.79, or 3.75 percent, at US$71.61 a barrel. For the week, June crude fell US$3.50, or 4.7 percent. In London, June Brent crude <LCOM0> expired and settled down US$2.93, or 3.66 percent, at US$77.18 a barrel. NYMEX June RBOB <RBM0> ended lower for the second straight day, down 6.43 cents, or 2.93 percent, at US$2.1308 a gallon.
OPEC Secretary General Abdullah Al-Badri said the global oil market was oversupplied, calling for greater compliance among members of the group. Badri said one of the main reasons for the drop in oil prices was speculative play. OPEC will take a wait-and-see approach before taking action to stem the sharp drop in prices last week, Badri added.
OPEC, in a monthly report, forecast world oil demand would rise by 950,000 barrels per day (bpd) this year, up 50,000 bpd from its previous estimate. The U.S. Energy Information Agency (EIA) forecast that global demand would grow by 1.57mn bpd, a 110,000 bpd increase from its month-ago estimate. The EIA also raised its average oil price estimate for the second half of 2010 by around US$2 a barrel, predicting NYMEX crude futures would average US$84 a barrel in the period, and rise to US$87 a barrel by the end of 2011.
Commercial crude oil supplies rose 1.9mn barrels to 362.5mn barrels in the week ended May 7, topping analysts’ projections for an increase of 1.3mn barrels. Gasoline stocks fell 2.8mn barrels to 222.1mn barrels, running counter to forecasts for a gain of 700,000 barrels. Distillate fuels, which include heat oil and diesel, posted a gain of 1.4mn barrels to 153.8mn barrels, close to a forecast rise of 1.3mn barrels. U.S. refinery utilization fell 1.2 percentage points to 88.4 percent of capacity, compared with analysts’ forecasts for a tiny rise of 0.1 percentage point.
U.S. natural gas futures ended lower on Friday, May 14, hit by a sharp slide in crude, mild weather forecasts and high inventories despite Thursday’s supportive weekly storage report and signs the economy is improving. June natural gas <NGM0> slipped 2.7 cents to settle at US$4.312 per million British thermal units. U.S. Energy Information Administration data showed total domestic gas inventories rose 94 billion cubic feet (bcf) to 2.089 trillion cubic feet (tcf) for the week ended May 7. Early injection estimates for next week’s EIA report range from 63 bcf to 93 bcf versus a 100 bcf build for the same week last year and a five-year average gain for that week of 93 bcf.
