Oil Prices Dip Below $45 a Barrel
Wed Feb 9, 2005 04:29 AM ET
LONDON (Reuters) - Oil prices dipped below $45 a barrel on Wednesday on expectations that data due later in the day would show rising U.S. inventories of crude and gasoline ahead of a seasonal drop in demand in the second quarter.
U.S. light crude was down 27 cents at $45.13 a barrel by 4:24 a.m. EST, recovering from an earlier low of $44.83. U.S. crude has declined since Jan. 25 when prices had pushed close to $50 on concern a cold snap in the United States would increase demand for heating fuel.
"The upside is limited by the fact there is some spare capacity in the system unlike late last year," said David Thurtell, a commodities strategist at Commonwealth Bank of Australia.
"We've passed the critical point leading up to the northern hemisphere winter. U.S. stocks of gasoline and crude are pretty strong and demand growth will probably moderate in 2005."
Oil touched a low just above $41 at the start of January, but has since traded between the mid-$40s and a 2005 peak of $49.75 -- still 11 percent below a record $55.67 hit last October.
Rising fuel stocks in the United States, the world's biggest energy consumer, have helped push prices down from last month's peak, and analysts predicted government data from the Energy Information Administration (EIA) would show further stock increases.
Twelve analysts polled by Reuters forecast U.S. crude inventories probably rose by 1 million barrels in the week ended Feb. 4, widening a surplus over a year earlier that stood at more than 24 million barrels in EIA data last week.
Gasoline supplies were seen rising 600,000 barrels, the analysts said. National gasoline stocks are already running almost 4 percent higher than at the same time in 2004.
Milder-than-normal winter weather in the Northern Hemisphere has eased supply concerns, leading traders to shift their focus from heating fuel to U.S. gasoline supplies, which some analysts say look high enough to avert a price spike in spring.
The EIA will publish its weekly report at 1530 GMT on Wednesday.
Dealers are wary that rising supplies and declining prices may trigger a change in sentiment among OPEC members, who have said they are unlikely to make any cuts to formal production limits before a meeting on March 16 in Iran.
The Organization of the Petroleum Exporting Countries at its meeting on Jan. 30 left its output unchanged at 27 million barrels per day (bpd), but warned that any sharp price decline or rise in commercial inventories could lead to output curbs.
The EIA trimmed its forecast for world demand in the second quarter by 100,000 bpd to 82.7 million bpd, citing factors including the impact of high world prices and slower Chinese demand growth.
China's crude oil imports were 24.1 percent lower in January than a year earlier, the first month since June 2002 to show a year-on-year drop, the Xinhua news agency said on Tuesday.
China's oil imports rose 35 percent last year, driven by an industrial boom and nationwide power crunch, but analysts have said more use of coal and gas would slow import growth this year.
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