Crude futures lose ground as traders eye substantial build in crude and fuel inventories
Crude oil futures witnessed substantial fall today after traders speculated that tomorrow’s weekly inventory report by Energy Department report will show U.S. oil and fuel inventories have registered substantial rise for the week ended 22 June.
For the day ending Tuesday, 26 June, 2007 crude-oil futures for light sweet crude for August delivery closed at $67.77/barrel (lower by $1.41/barrel or 2.04%) on the New York Mercantile Exchange. Prices are down 5.6% from a year ago.
Brent crude oil for August settlement declined $1.19 (1.7%) to close at $70.17 on the ICE Futures exchange in London.
Traders are speculating that tomorrow’s weekly report will show that crude oil supply surged by 1-1.5 million barrels for the week ended 15 June. A climb of 2.2 million barrel for gasoline and a 250,000 barrel increase in distillates is also expected. Refineries are expected to have operated at 88.4% of capacity, up 0.8 percentage point from the week before.
As per latest reports, ConocoPhillips and Exxon Mobil will quit Venezuela where they invested billions of dollars in oil and natural gas projects, after talks about ownership failed.
July natural gas finished lower today, down 6.3 cents at $6.877 per million British thermal units, its lowest level since mid-January.
Against this backdrop, July reformulated gasoline fell 5.56 cents (2.4%) to close at $2.2469 a gallon and July heating oil fell 4.91 cents to end at $1.9933 a gallon.
Oil demand will rise to 118 million barrels per day by 2030 - OPEC
Concern that the dispute over Iran's nuclear program might disrupt shipments from the country has supported prices over the past year. Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have also bolstered prices.
OPEC currently said that high prices alone aren't enough to warrant an increase in production because there's ample supply of crude oil for refiners. The group is due to meet in Vienna on 11 September to review its production ceiling for the winter season, when consumption of heating fuel increases in the Northern Hemisphere.
IEA has revised its outlook for worldwide demand of oil products, citing new data it's received from Nigeria, Indonesia and other countries. Global demand is expected to increase by 2% to 86.1 million barrels a day from a revised 84.5 million barrels a day in 2006. That's 420,000 barrels more than the IEA projected in May. In May, it had predicted a 1.8% rise in 2007.
Today, OPEC came out with its latest world oil outlook report. The report predicts that global oil demand will rise to 118 million barrels per day by 2030, from 83 million in 2005.
OPEC also said in its report that "demand for energy is set to continue to grow and oil is expected to maintain its leading position in meeting the world's growing energy needs for the foreseeable future." The cartel expects OPEC's benchmark crude price to remain in the $50-$60 range for much of the projection period to 2030.