By Brad Foss –
WASHINGTON (AP) – Oil prices fell Monday as traders took profits in a continuation of last week’s downward trend.
After dipping as low as $53.60 US, light, sweet crude futures for May delivery settled 79 cents lower at $54.05 a barrel on the New York Mercantile Exchange. That’s more than $3.50 a barrel below the intraday high of $57.60 set on March 17.
“After the runup to $57 (a barrel) it seems like the market ran out of a little steam,” said Aaron Kildow, a broker with Prudential Financial in New York.
But with the summer driving season around the bend, Kildow said a free-fall in prices isn’t likely, even though there’s an ample U.S. domestic supply of crude oil and gasoline.
The latest government data showed U.S. inventories of crude oil at 309.3 million barrels, or eight per cent above year ago levels, while gasoline supplies are at 217.3 million barrels, also eight per cent above year ago levels.
Gasoline futures fell 2.65 cents to settle at $1.5727 per gallon on Nymex, where heating oil futures were steady at $1.5476 a gallon. Natural gas futures fell 6.3 cents to close at $6.999 per 1,000 cubic feet.
Oil analyst Victor Shum at Purvin & Gertz in Singapore said he expects prices to ease further due to the seasonal drop in demand in the second quarter.
“In the short-term, the crude oil market looks to be well-supplied,” he said. “There will be some downward correction.”
However, other analysts caution that strong demand from China and other growing economies would probably keep prices high for now.
The Organization of Petroleum Exporting Countries said Sunday that the group will take its time in increasing output quotas by an additional 500,000 barrels per day due to global petroleum market fluctuations.
“Oil prices have witnessed fluctuations on world markets in the past two days, which prompted the organization to take its time in implementing the second increase,” OPEC spokesman Abdel-Rahman al-Khreiji told Kuwait’s state news agency, KUNA, in Vienna.
OPEC agreed earlier this month to raise production quotas by 500,000 barrels per day and said it would consult on whether to increase them by a further 500,000 if prices continued to rise.
Khreiji said OPEC will monitor petroleum prices in the coming few days.
“If it finds that there is a need to interfere, the cartel president will consult with the remaining ministers to specify a date for implementing the new increase,” he said.
Source: MoneySense Canada