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Oil falls further, dropping for 3rd day U.S. oil supplies up, evidence U.S. inflation rage quickening, help pull price down from $147 record; range now $135-$145 George Jahn Associated Press Writer
Crude prices fell for a third consecutive day July 17 amid evidence that the high cost of oil and gasoline was slowing U.S. demand.
Crude prices have plummeted more than $10 a barrel over the previous two sessions, and were down nearly $1 in electronic trading July 17. But prices are still well above year-ago levels.
Higher U.S. oil supplies, along with evidence of quickening inflation and slowing economic activity in the world’s largest economy, have helped pull prices down from a July 11 record above $147 a barrel, said Victor Shum, an oil analyst with consulting firm Purvin & Gertz in Singapore.
“We’ve had a run of bearish news the last few days,” he said. “This roller-coaster volatility has left us in a near-term trading range of between about $130 and $145.”
Light, sweet crude for August delivery was down 93 cents at $133.67 a barrel by midday in European electronic trading on the New York Mercantile Exchange.
Crude fell $4.14 in the previous session to settle at $134.60 a barrel, after earlier sinking as low as $132. The drop followed a US$6.44 sell-off July 15, crude’s biggest since the Gulf War.
Crude prices still up 80% over last year, 40% from January
Despite the two-day slide of $10.58 a barrel in floor trade, prices remain about 80 percent above where they were a year ago and up about 40 percent from the start of the year.
The Energy Information Administration reported July 16 that U.S. crude supplies rose 3 million barrels the week ending July 11. That was opposite the 3 million barrel draw analysts surveyed by energy research firm Platts had expected. Gasoline supplies also leapt higher unexpectedly.
The rise in crude and gasoline supplies shows how high motor fuel prices are starting to weaken demand from U.S. consumers in the middle of America’s summer driving season, analysts said.
“As of July 11, total stocks of crude oil and petroleum products rose for the seventh time in the last two months and for the eleventh time in the last three months, up 0.5 percent to 1.69 billion barrels, a year-to-date high,” wrote analyst and trader Stephen Schork in a research note.
June consumer prices up 1.1% The Labor Department also said July 16 that consumer prices shot up 1.1 percent in June, the second fastest pace in 26 years. Rising energy prices accounted for two-thirds of that increase, which was far worse than expected.
Testifying before Congress for a second day on July 16, U.S. Federal Reserve Chairman Ben Bernanke said central bank policymakers are facing “significant challenges” in stabilizing a U.S. economy troubled by weak growth and inflation.
Oil demand in developing nations, however, continues to rise and keep global crude supplies tight, Shum said.
“Only in the U.S. are we seeing significant demand erosion,” Shum said. “Supplies are still struggling, and there’s a reasonable chance for a resurgence in oil prices.”
Brent crude futures were fetching $135.43, down 38 cents on the ICE futures exchange.
In other Nymex trade, heating oil and gasoline futures were essentially steady at $3.84 and $3.2790 a gallon. Natural gas futures rose 7.2 cents to $11.47 per 1,000 cubic feet.
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