LONDON, 7 April 2005 — World oil prices retreated further yesterday after US data showed refineries accelerating activity, easing concerns about possible shortages of gasoline ahead of the northern hemisphere summer, analysts said.
New York’s main contract, light sweet crude for delivery in May, dropped 44 cents to $55.60 per barrel in early deals. In London, the price of Brent North Sea crude oil for delivery in May lost 24 cents to $55.20 per barrel.
Oil prices had hit fresh historical records on Monday of $58.28 a barrel in New York and $57.65 in London amid supply worries but have since fallen heavily on profit-taking. “On the bearish side there is the fact that the (US) refineries are clearly back from maintenance,” Societe Generale analyst Deborah White said.
US refineries operated at 93.7 percent of capacity last week, up from 91.1 percent the previous seven-day period. Refineries tend to undergo maintenance between February and April.
With US gasoline prices hitting new record highs, the market is sensitive to inventory levels as the United States enters the summer driving season.
US inventories of crude oil grew over the past week while gasoline reserves fell, according to government data yesterday.
The US Department of Energy (DoE) said crude oil reserves rose 2.4 million barrels to 317.1 million in the week to April 1, just shy of the 2.5-million-barrel gain expected by financial markets.
Crude oil reserves, up 22.8 million barrels over the past eight weeks, are now at the high end of what is considered normal for this time of year.
The DoE report showed a drop in gasoline inventories of 2.1 million barrels to 212.3 million, in line with market forecasts. But reserves of gasoline remain about 5.5 percent higher than at the same time last year and DoE officials pointed out that refining activity has picked up over the past week.
Oil prices soared to historic high levels above $58 per barrel on Monday on concerns about a lack of US refining capacity to turn crude into gasoline in time for Americans taking to the open roads in their cars on summer vacations, beginning next month.