Nymex Crude Futures Settle at Fresh 2013 Low on Demand Woes
Oil futures extended their recent losses Wednesday, hitting their lowest level all year in the U.S., as investors focused on falling gasoline demand in a weekly report on domestic crude stockpiles.
The Energy Information Administration said its measure of demand for the motor fuel fell 1.1% to 8.3 million barrels a day during the week ended April 12, the lowest level for that week in 16 years.
The decline in demand follows weeks of disappointing economic headlines, which have damped sentiment about oil demand.
"Demand is weakening and looking at the economic numbers of the last few weeks we knew that was going to happen," said Carl Larry, president of Oil Outlooks and Opinions, an energy newsletter.
Light, sweet crude for May delivery settled $2.04, or 2.3%, lower at $86.68 a barrel on the New York Mercantile Exchange, the lowest finish yet this year. Brent crude on the ICE futures exchange recently declined $2.11, or 2.1%, to $97.80 a barrel.
The disappointing gasoline demand figure is the latest sign that demand concerns have captured the focus in the oil market, particularly in the wake of disappointing economic data out of the U.S. and elsewhere.
In recent weeks, the International Energy Agency, the Organization of the Petroleum Exporting Countries and the Energy Information Administration all cut their outlook for 2013 oil demand growth. Nymex crude has fallen more than 10% since a recent high in February, while Brent has shed more than 15% since February.
"Demand, especially in Europe, is going to continue to be poor," said Andy Lipow, president of Lipow Oil Associates, a Houston consultancy. "That and stagnant growth in the U.S. Those are weighing on the market."
Analysts at BNP Paribas were the latest market observers to cut their oil-price forecast, citing the recent market downturn. The analysts cut their 2013 average forecast for Nymex crude to $95 a barrel from $100 and cut their Brent outlook to $108 from $115, though they said prices could recover later in the year.
The EIA said oil stockpiles last week dropped 1.2 million barrels last week, marking a retreat from a 23-year high. Analysts surveyed by Dow Jones Newswires were calling for an increase of 900,000 barrels. Gasoline stocks fell 600,000 barrels, while stocks of distillates--including heating oil and diesel--jumped 2.4 million barrels.
Refinery utilization fell 0.5 percentage point to 86.3% of capacity.
Analysts expected U.S. gasoline stockpiles to fall by 500,000 barrels, while stocks of distillates were forecast to fall by 500,000 barrels. Refiners are expected to keep operations unchanged.
Front-month May reformulated gasoline blendstock, or RBOB, settled 5.28 cents, or 1.9%, lower at $2.7290 a gallon. May heating oil settled 7.19 cents, or 2.6%, lower at $2.7346 a gallon.
WHAT DO YOU THINK?
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.