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Growth Concerns Bring Crude Oil to a Halt

THE WALL STREET JOURNAL: Growth Concerns Bring Crude Oil to a Halt

Futures Rise 3 Cents
After Strong Gains;
A Drop in Demand?
April 12, 2008; Page B5

Crude-oil futures stalled after a week of strong gains, closing flat as economic-growth concerns weighed on the market.

Light, sweet crude for May delivery settled up three cents at $110.14 a barrel on the New York Mercantile Exchange.

Early in the day, the International Energy Agency cut its oil-demand growth forecast by 460,000 barrels a day, the biggest downward revision in seven years. The energy watchdog for the most industrial countries now sees global oil demand increasing by 1.3 million barrels a day to 87.2 million barrels a day.
The IEA report was followed by data showing U.S. consumer confidence plunged to a 26-year low in mid-April, largely thanks to high food and fuel prices. General Electric Co. also reported disappointing earnings, body-slamming the stock market.

“It just adds to a whole general malaise,” said Mike Fitzpatrick, an analyst at brokerage MF Global in New York.

The Nymex contract settled $3.91, or 3.7%, higher for the week and marked a fresh record settlement price of $110.87 a barrel Wednesday on data showing unexpectedly large drops in U.S. crude, gasoline and distillate fuels stockpiles. The next installment of the data next week will be a crucial factor for the markets, analysts said.

“Who wants to sell on bad economic news if there’s going to be another inventory draw?” said Walter Zimmermann, a technical analyst at brokerage ICAP/United Energy in Jersey City, N.J. “That’s the tug of war here.”

While conceding a spike to $120 a barrel is possible, Mr. Zimmermann sees a hurting economy taking prices lower. The GE report “just adds to the climate of impending doom that will help feed the economic contraction and ensuing corrective retreat in energy prices,” he said.

The Paris-based IEA, in its oil-market report, said expectations of a global economic slowdown “suggest less robust oil demand growth in the coming months.” The International Monetary Fund this week cut its baseline forecast for global growth in 2008 to 3.7% from the last estimate of 4.2%, made in January.

Yet the agency also suggested risks to supply in unstable regions and demand in emerging economies such as China and India could sustain current oil prices. Some traders say that after this week’s record oil prices, the market is poised for another move higher.In other commodity markets:

COCOA: ICE Futures U.S. May cocoa gained $72 to $2,541 a metric ton. For the week, May cocoa gained $285.

GOLD: Profit-taking and weakness in crude oil pressured gold futures. June gold fell $4.80 to $927 an ounce on the Comex division of the Nymex.

The article contains a video clip in which Shell Oil Co. President John Hofmeister discusses current crude prices. He says geopolitical conflicts are causing tensions and makes a case for producing more oil within the U.S.

Write to Gregory Meyer at [email protected] and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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