Oil Falls To Around $83 In Europe

[Wise_Guy 44]

LONDON: Oil prices fell to around $83 a barrel Thursday amid indications of weak crude demand in the U.S., the world's largest energy consumer.

By early afternoon in Europe, benchmark crude for June delivery was down 70 cents to $82.98 a barrel in electronic trading on the New York Mercantile Exchange. It fell 17 cents to settle at $83.68 a barrel on Wednesday.

The U.S. Energy Information Administration reported that the nation's oil supply grew last week to 355.9 million barrels and gas supplies rose to 3.6 million barrels.

Both supply figures are above average for this time of year, indicating demand is lagging supply.

"The fundamental picture for the U.S. has not changed since last year, the U.S. petroleum supply system has rarely been as comfortable as today and the growth of Chinese demand versus a year ago has not changed anything because there is enough spare capacity in the global system to answer any demand increase," said analyst Olivier Jakob of Petromatrix in Switzerland.

The EIA report also said motorists are burning more gasoline than last year, but demand hasn't increased enough to cut into the huge surplus that built up during the recession.

"Fundamentals remained weak and demand hasn't really picked up. Crude has a good chance to test the $80 a barrel level," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore.

Chu said traders will look out for EIA figures next week to see if there is a further buildup in inventory, or whether demand has picked up.

The price of crude, which is 80 percent more expensive than 12 months ago, has been a concern throughout the energy industry. The increase seems to be tracking the dollar and the direction of stocks on Wall Street, not American energy demand.

"We have contended and data has confirmed that oil prices at these levels contain more than a bit of wishful thinking," said Mike Fitzpatrick, a vice president of energy at MF Global in New York. "Technical analysts who were predicting near-term prices of $90-$100, now look for $75-$77."

In other Nymex trading in May contracts, heating oil fell 0.71 cent to $2.1987 a gallon and gasoline lost 1.52 cent to $2.2675 a gallon. Natural gas was up 3 cents to $3.985 per 1,000 cubic feet.

In London, Brent crude was down 58 cents to $85.12 on the ICE Futures exchange.

[shahabi 23]

Hmmmmm......