Oil prices fall after data shows stockpiles higher than average
NEW YORK – Oil prices slipped Wednesday after government data showed that stockpiles of crude last week were above average for this time of year.Light sweet crude for September delivery fell 75 cents to $72.40 a barrel in electronic trading on the New York Mercantile Exchange in midday trading in New York.October Brent at the ICE Futures exchange, which becomes the front-month contract beginning Thursday, lost 77 cents to $73.00 a barrel. The September contract dropped 80 cents to $73.00 a barrel.The Energy Department reported Wednesday that the country’s commercial crude oil inventories fell 1.6 million barrels in the week ending Aug. 11 from the previous week. However, inventories remain well above the average range for this time of year at 331 million barrels.”The report was pretty much marginally in line with expectations overall,” said Raymond Mazzeo, vice president at Energy Merchant LLC, who expected crude oil stocks to drop by 1.3 million barrels. “It remains a bearish market.”Gasoline inventories also fell by 2.3 million barrels last week, compared with a forecast of 1.8 million barrels, according to Mazzeo. But stocks remain at the lower end of the average range. Gasoline futures edged up by less than a penny to $1.9975 a gallon.Distillate stocks, which include heating oil and diesel fuel, rose by 800,000 barrels to 133.2 million barrels. Analysts had anticipated an increase of 500,000 barrels.Heating oil futures rose 0.25 cent to $2.0210 a gallon, while natural gas futures rose 11.9 cents to $6.980 per 1,000 cubic feet.Oil prices have steadily fallen this week when supply fears abated after a cease-fire held in Lebanon and BP PLC resumed partial production in Alaska.Despite a few early skirmishes, both Israel and Hezbollah forces avoided any escalation and Israeli forces began pulling out of southern Lebanon on Tuesday. Prices had hit a record high of $78.40 a barrel on July 14, two days after fighting erupted in Lebanon.BP originally said it would have to completely shut down its Prudhoe Bay oil field in Alaska, the largest in the U.S., after discovering a pipeline leak, but later said it expects to maintain half of the production.The Organization of Petroleum Exporting Countries also trimmed its oil demand growth outlook for this year as high prices hurt consumption in some of the world’s wealthiest countries.OPEC, which accounts for about 40 percent of the world’s oil output, cut its 2006 demand forecast by 80,000 barrels a day from its previous monthly report. It now expects demand growth of 1.3 million barrels a day on average at 84.5 million barrels per day, the group said. That mirrors other recent reports predicting weaker demand growth this year.The group is scheduled to meet on Sept. 11. Many analysts don’t expect the group to formally cut production with oil prices still high amid concerns about supply shortfalls.Concerns about supply disruptions in Nigeria due to civil unrest are lingering in the market, as are worries over the standoff between the United Nations and Iran over its nuclear program. Iran has said it will respond by Aug. 22 to an offer of incentives in exchange for a pledge to suspend uranium enrichment.Oil traders are also watching weather patterns for potential hurricanes that could strike Gulf of Mexico coast refineries, as well as signals for where fuel demand is headed.”We are still not out of the woods on a number of key issues during this particular timeframe, of which the (Atlantic) ‘hurricane window’ and the Iranian situation are on top of the heap,” Edward Meir at Man Financial said in a note to clients.