Crude futures fall back from record highs

22 May 2008 12:01  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures have fallen back from record highs that breached $135/bbl earlier on Thursday, the soaring values reflecting an unexpectedly large decline in US crude stocks and a weakening US dollar.

 

At 10:25 GMT on Thursday, Brent July futures on London’s ICE were traded at $134.30/bbl, up $1.60/bbl on Wednesday’s settlement price. Earlier the contract hit a new record high of $135.14/bbl, up $2.44/bbl.

 

At the same time, July NYMEX light sweet crude futures were traded at $134.49/bbl, up $1.32/bbl on the previous close, after it had earlier hit a record high of $135.09/bbl, up $1.92/bbl.

 

Prices had surged after US weekly supply data from the Energy Information Administration (EIA), released on Wednesday, revealed an unexpected decline in crude stocks of some 5.4m bbl. Analysts had forecast a build of around 600,000 bbl.

 

US gasoline inventories also showed a surprise fall of some 800,000 bbl, against a forecast gain of 700,000 bbl, which prompted a run up in gasoline futures to new record levels. Distillate stocks rose by just 700,000 bbl against an expected increase of 1.3m bbl.

 

Meanwhile, Total said French fishermen were blockading two oil refineries and fuel depots in France in a protest over high fuel costs.

 

The US dollar had also weakened to a one-month low against the euro after the US Federal Reserve cut its forecast for economic growth to 0.3-1.2% in 2008, against a previous forecast of 1.3-2%.

 

Weakness in the US dollar has served to attract fund money into the energy and commodity markets as a hedge against inflation.

 

However, US Energy Secretary Sam Bodman said record high oil prices accurately reflected tight supplies and strong global demand and mentioned that speculators were not responsible for the hike.

 

His views were in sharp contrast to those expressed earlier in the week by senior OPEC officials who blamed the record high prices on speculation, a weak dollar and geopolitical problems. OPEC believed oil markets to be well supplied and continued to resist calls to increase ouput.

 

($1 = €0.63)

 

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By: James Dennis
+65 6780 4359

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