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Oil falls as API crude inventories unexpectedly rise

10th Mar 2010, 5:28 pm
Oil falls as API crude inventories unexpectedly rise

Oil inched lower today, pressured by yesterday’s bearish inventories data from API (American petroleum Institute) and a stronger US dollar.

API said crude stockpiles in the US added 6.5 million barrels, while a smaller increase was expected. The data also signalled a sixth straight week of expansion in oil inventories. Gasoline inventories and distillates, which include heating oil, declined by 3.2 million barrels and 2.8 million barrels respectively. More closely watched inventories data from EIA (Energy Information Administration) is set to be released tomorrow.

OPEC (Organization of Petroleum Exporting Countries) has upped its demand forecast for the current year, projecting the global consumption to grow by an additional 0.9 mmbbls/d (million barrels per day) to 85.24 mmbbls/d provided that the ongoing economic recovery firms. Demand for the oil produced by OPEC, which currently accounts for 35% of the total, is expected to reach 29 mmbbls/d, topping the previous forecast by 0.2 mmbbls/d.

The US dollar also weighed on crude in the morning and early afternoon, gaining against the euro, which was down under pressure from rating agency Fitch’s comments on Portugal, in which it threatened of a possible downgrade from the country’s current AA rating if the ongoing fiscal consolidation proves insufficient. However, Europe’s single currency rebounded later after the debt laden country conducted a successful bond issue to raise US$1.35 million.

April Brent Crude dropped to US$79.88/barrel, while US light, sweet crude declined to US$81.37/barrel, still showing slight improvement from the morning’s levels.

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