Oil Prices Sink Toward $72 a Barrel
Filed at 3:11 a.m. ET
SINGAPORE (AP) — Oil prices extended losses Thursday after a big drop the previous day that was caused by U.S. government data showing higher gasoline supplies.
Light sweet crude for June delivery sank 18 cents to $72.10 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, prices plunged $2.33 to settle at $72.28 a barrel after the U.S. Energy Department released a weekly petroleum report. The data showed a supply rise as refineries boost output and demand flattens.
But oil prices remain about 46 percent higher than a year ago, and analysts do not expect them to fall sharply anytime soon. A peak of $75.35 was reached April 21.
The most pressing source of anxiety in the market stems from the possibility that Iran, a key oil exporter, could cut supplies because of international pressure to modify its nuclear program.
Strong global demand, a limited supply cushion and persistent production outages in Nigeria and the Gulf of Mexico have also exerted upward pressure. And a surge of investors betting on oil and other commodities to rise has also lifted prices.
In other Nymex prices Thursday, gasoline futures sank 0.0057 cent to $2.08 a gallon, heating oil futures rose 0.0018 cent to $2.0050 a gallon and natural gas futures fell 0.006 cent to $6.60 per 1,000 cubic feet.
The Energy Department's weekly petroleum report showed that over the past four weeks, average daily gasoline demand in the United States was 9.127 million barrels per day, barely higher than year-ago demand of 9.125 million barrels a day.
The report also showed that domestic inventories of gasoline climbed by 2.1 million barrels, reversing eight straight weeks of declines. U.S. gasoline supplies stand at 202.7 million barrels, or 5 percent below year-ago levels.
Still, crude oil prices are not likely to ease soon thanks to multiple supply disruptions and geopolitical tensions, analysts said.
Some 500,000 barrels per day of Nigerian production, most of it operated by Royal Dutch Shell PLC, remains off-line as a result of violence there, and more than 300,000 barrels per day remains shut in the Gulf of Mexico since Hurricane Katrina smacked offshore platforms.
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