World Business

Oil declines on falling US energy demand

By Rachel Graham (China Daily)
Updated: 2010-06-24 10:50

LONDON - Crude oil declined in New York for a second day amid evidence that demand is falling in the United States, the world's largest energy consumer.

Crude inventories increased 3.69 million barrels last week for a second week, according to a report on Tuesday from the industry-funded American Petroleum Institute. A US government report on inventories on Wednesday may show a drawdown. European equity markets opened lower.

"The American Petroleum Institute (API) figures were very bad. They pushed the market lower," Roland Stenzel, a crude and carbon trader at E&T Energie Handelsgesellschaft mbH, said from Vienna. "Equities could be negative for the market today."

Crude for August delivery fell as much as 81 US cents, or 1 percent, to $77.04 a barrel in electronic trading on the New York Mercantile Exchange and traded at $77.52 a barrel as of 8:43 am London time.

The July contract dropped 61 US cents, or 0.8 percent, to settle at $77.21 a barrel and expired at the close of floor trading on Tuesday. Futures are down 2.3 percent this year.

The US Department of Energy report may show US crude inventories fell 800,000 barrels in the week ended June 18 from 363.1 million, according to the median estimate from 15 analysts surveyed by Bloomberg News. Gasoline stockpiles may have slipped 180,000 barrels and distillates, including heating oil and diesel, likely rose 1.5 million barrels.

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"I don't think the oil market is tight at present," said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd in Sydney. "Inventories remain high."

Crude supplies at Cushing, Oklahoma, the delivery point for the New York futures, gained 386,000 barrels to about 37.96 million, the API said on Tuesday. That's 36,000 barrels below a record reported for the week to May 14.

Gasoline stockpiles increased 810,000 barrels to 221.2 million, the highest in five weeks, according to the API. Distillates increased 1.1 million barrels to 154.7 million, a four-month high.

Brent crude for August delivery dropped as much as 73 US cents, or 0.9 percent, to $77.31 a barrel on the London-based ICE Futures Europe.

Bloomberg News