NEW YORK, 28 April 2005 — Oil prices fell sharply to close below $52 yesterday as the market reacted to a strong report on US inventories and President George W. Bush promised to reduce US dependence on energy.
The June contract on the New York Mercantile Exchange closed at $51.61 a barrel, down $2.59. Oil prices began a downward movement after a strong report on US inventories earlier in the day, and slid further after Bush’s comments.
The Energy Department and the American Petroleum Institute reported much larger than expected increases in US crude supplies. “We now have to look back to May 31, 2002, to find a higher tally and this puts additional pressure on prices,” said Tim Evans, senior market analyst at IFR Markets, in a note to clients. “This looks much more like a glut than a shortage.”
Meanwhile Bush’s comments, calling for increased independence from foreign oil, also prompted a move out of the market by speculators. “A lot of speculators are liquidating,” said Fimat analyst Steve Bellino. “All are running to the gate at same time. It’s long overdue.” In London, the price of Brent North Sea crude oil for delivery in June shed $1.11 to $53.03 per barrel, after dropping to $52.75 on publication of the data.
The US Department of Energy (DoE) said crude stockpiles for the week ending April 22 increased 5.5 million barrels to 324.4 million barrels, against Wall Street expectations for a rise of just 650,000.
The private-sector American Petroleum Industry, compiling its own figures supplied by brokers, reported an increase of 4.66 million barrels to 324.66 million.
The DoE reported that gasoline stockpiles had fallen 300,000 barrels to 211.3 million over the week, against a predicted drop of 1.2 million barrels, easing supply concerns.
