Crude-Oil Futures Settle Down 10 Cents at $94.15/Barrel, a 3-Week Low
NEW YORK--Crude-oil futures prices fell for the fourth day Friday amid concerns over future growth in oil demand by the world's two biggest oil consumers.
Opening the week at a seven-week high near $97 a barrel, prices were unhinged by signs that China's manufacturing sector had dropped to seven-month lows. China, the second-biggest oil consumer after the U.S., has been the engine of global oil-demand rises in recent years and is expected to account for half of the rise of nearly 900,000 barrels a day expected by the Energy Information Administration this year.
Potential for slowdown in China comes as the demand in the U.S. is sluggish and crude stocks have climbed to the highest level since 1981. Forecasts from the federal EIA show gasoline demand in the summer driving season easing from last year to the lowest level in 12 years.
Meantime, signals from the Federal Reserve indicate that the central bank is nearing the time when it will consider reducing its massive bond-buying program aimed as stimulating the economy. "That's been one of the main props for oil prices," said Gene McGillian, analyst and broker at Tradition Energy.
Light, sweet crude oil for July delivery on the New York Mercantile Exchange settled 10 cents lower, at $94.15 a barrel, the lowest price since May 2.
Prices climbed back from steep, earlier losses to end little changed for a second day as gasoline futures gained ahead of the Memorial Day holiday weekend, the kick-off to the summer driving season.
"The market is entrenched in the middle of a $90-$98 range and as long the U.S. economic recovery remains uncertain, that will drag us lower," Mr. McGillian said. As prices near the top end of that range, hit in late January, "the fundamentals look more and more out of skew," and selling pressures take over, he said.
ICE North Sea Brent crude oil futures for July rose 20 cents on the day, and settled at an $8.49 a barrel premium to the U.S. benchmark, a one-week high.
Traders said Brent gained strength from summer oilfield maintenance work, which will reduce supplies.
June-delivery reformulated gasoline blendstock futures settled 1.09 cents higher, at $2.839 a gallon. Prices still are off sharply from the five-week high near $2.91 a gallon set last Friday. The EIA reported gasoline inventories last week rose by a sharp 3 million barrels against forecasts for a modest drop. The gain suggests that inventories will be more than adequate to meet near-term demand.
Heating oil for June delivery settled 0.31 cent lower at a three-week low of $2.8569 a gallon, and ended the week down 3.2% from the six-week high, above $2.95 a gallon, set on Monday.
Write to David Bird at firstname.lastname@example.org
Copyright (c) 2013 Dow Jones & Company, Inc.
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.