Crude prices drop from record highs as inventory rises more than expected
Crude prices fell from their record highs today, Thursday, 21 February, 2008. Prices fell after an Energy Department report showed that U.S. inventories rose almost twice as much as forecast, as refineries slowed processing to perform seasonal maintenance.
Crude-oil futures for light sweet crude for April delivery today closed at $98.23/barrel (lower by $1.47/barrel or 1.45%) on the New York Mercantile Exchange. Earlier in the session, the April contract it a low of $96.27 a barrel.
EIA reported today that crude inventories rose 4.2 million barrels in the week ended 15 February outstripping the increase of 3.2 million barrels that market expected. On the demand side, EIA reported motor gasoline demand has averaged 9.0 million barrels per day, or 0.5% above the same period last year. Distillate fuel demand has averaged 4.3 million barrels per day over the last four weeks, down 1.9% compared to the same period last year.
EIA also reported that Gasoline supplies rose by 1.1 million barrels in the latest week, while distillate stocks fell by 4.5 million barrels. Total petroleum inventories, including crude oil, gasoline, and diesel, decreased by 3.7 million barrels last week, but they are still in the upper half of the average range for this time of year.
Brent crude oil for April settlement today fell $2.18 (2.2%) to $96.24 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.
Natural gas declines
Natural gas futures declined on signs the U.S. economy is moving closer to a recession, paring energy demand. March natural gas fell 7.4 cents to $8.891 per million British thermal units. EIA also reported that natural gas inventories fell 172 billion cubic feet to 1,770 billion cubic feet.
Against this backdrop, March reformulated gasoline dropped 6.32 cents to $2.5220 a gallon, and March heating oil fell 1.65 cents to $2.7381 a gallon.
In a monthly report released last week, EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.