Oil slid more than $1 to under $49 on Tuesday, extending the previous day's drop as caution grew ahead of the release of US weekly data that could show a rise in crude stocks for the world's top energy user. The grim US inventory report is likely to confirm the International Energy Agency's dismal outlook for global oil demand, after it slashed its 2009 forecasts on Friday.
"The inventory data is still expected to be fairly bearish, and the market's pricing that in," said Mark Pervan, a senior commodity strategist with ANZ Bank in Melbourne. "There's growing caution - we've had a pretty good run in the last couple of weeks, and the market is now looking for signs to take profits, rather than build positions."
By 0758 GMT, US crude for May delivery was down 65 cents at $49.40 a barrel, after falling to $48.96. Prices had fallen $2.19, or over 4 percent, on Monday. ICE Brent crude was down 37 cents at $51.77 a barrel. Oil prices have been stuck in a $47-$54-range for the past four weeks, having recovered from a low of $32.40 in December. They are still down almost $100 from a record high above $147 last July.
The US Energy Information Administration (EIA) releases its short-term energy outlook at 1230 GMT on Tuesday, which will give an estimate of global and US oil demand for the year, and unveils its weekly inventory data on Wednesday. The American Petroleum Institute (API) will unveil its weekly report later on Tuesday at 2030 GMT, while Opec publishes its monthly view on Wednesday.
The preliminary forecast ahead of the weekly API/EIA inventory figures calls for a 2.2 million-barrel increase in crude stocks, a 1.0 million-barrel decline in distillate supplies and a 700,000-barrel drawdown in gasoline stocks. Oil traders consider the API report to be less accurate than the EIA data, which requires energy firms to respond to their weekly survey.
The IEA struck a gloomy note on Friday when it said world oil demand would fall by 2.4 million barrels per day (bpd) this year from 2008 to 83.4 million bpd, as the rate of contraction in fuel consumption reached levels last seen in the early 1980s. On the supply front, Saudi Arabia will trim oil supplies to some of its Asian customers in May, and one European buyer suggested the world's top exporter was concerned about high inventories.
Saudi Arabia has been largely responsible for Opec's high level of compliance - estimated at 80 percent - with agreements to cut output by a total of 4.2 million bpd since September last year. Iran's Opec governor Mohammad Ali Khatibi said if oil demand continued to fall, the group might decide to further cut its oil output, but Qatar's Oil Minister Abdullah al-Attiyah said it was "too early to react" to the IEA forecast.
Comments
Comments are closed.