Finance & Investing
News Services
Newsletters
Get free industry updates via email.
Daily News
Weekly News
Equipment Updates
Weekly Job Register
Monthly Event Guide
Our privacy
pledge.


advertisement

Crude Prices Fall on Lower Expectations for Global Oil Demand

change text size

Crude-oil futures edged lower Wednesday after a closely watched industry forecast cut estimates for global crude demand in 2013.

The Paris-based energy watchdog International Energy Administration projected that 2013 global oil consumption would grow by 840,000 barrels a day, or 90,000 barrels a day less than the group's estimate last month. The group pegs global consumption at 90.7 million barrels a day.

The IEA said predictions of higher oil use may be overly optimistic, particularly for China, the world's second-largest oil consumer. The report questioned whether a steep increase in Chinese imports in recent months would translate into higher long-term demand. Chinese crude imports jumped 6.1% in December and 7.4% in January, versus the previous year.

"The Chinese data has been better than expected, but people seem to be getting a little ahead of themselves with the optimism about Chinese demand," said Tariq Zahir, managing member of New York-based commodity fund Tyche Capital Management.

Light, sweet crude for March delivery settled 50 cents, or 0.5%, lower at $97.01 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 6 cents higher at $118.72 a barrel.

The IEA forecasts added uncertainty to the crude market, traders and analysts said. The projections came a day after the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration both raised their expectations for 2013 global demand.

"The IEA report was bearish, while the OPEC and EIA reports were both bullish, so what really matters now is Chinese economic data in the next few months," said Dominick Chirichella, an oil analyst at the Energy Management Institute in New York.

Separately, a weekly report from the EIA on Wednesday showed U.S. crude-oil inventories rose by 600,000 barrels last week, below the 2.3 million-barrel increase forecast by analysts surveyed by Dow Jones Newswires.

A smaller-than-expected increase in inventories points to stronger demand, but crude-oil prices fell after the report. Analysts said some in the market had been lulled into thinking the stockpiles would sharply decline after a survey by the American Petroleum Institute late Tuesday. That survey saw crude inventories plunging 2.3 million barrels.

"Given that we saw this huge drawdown from the API figures last night, people had been expecting something more like that," said Matt Smith, energy analyst at Summit Energy.

Also, the EIA report showed a 1.2 million-barrel drop in crude stockpiles at the oil hub of Cushing, Okla., indicating that a glut of oil in the Midwest may be easing.

The glut has put pressure on U.S. oil prices for the last two years as production from shale oil discoveries in the U.S. and Canada has flooded into the Midwest, which lacked adequate infrastructure to transport it elsewhere. That situation was exacerbated last month by problems with the Seaway pipeline, which carries crude from Cushing to key refiners in the U.S. Gulf of Mexico region.

"The bottleneck in the Seaway pipeline may not be as much of a problem as it was a couple weeks ago," Mr. Chirichella said.

Front-month March reformulated gasoline blendstock, or RBOB, settled 1.49 cents, or 0.5%, lower at $3.0354 a gallon. March heating oil settled 1.74 cents, or 0.5%, lower at $3.2188 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.


Most Popular Articles
From the Career Center
Jobs that may interest you
Trader Development Program (TDP) - Houston, TX
Expertise: Energy / Commodity Trader, Supply Chain Management
Location: Houston, TX
 
Sales Engineer
Expertise: Sales and Marketing
Location: Aurora, IL
 
Proposal Manager
Expertise: Business Development, Sales and Marketing
Location: Houston, TX
 
search for more jobs