Oil falls ahead of US inventory report

LONDON – High-flying oil prices eased yesterday ahead of a US government report expected to show the world’s largest consumer built crude and gasoline inventories last week.

London Brent crude fell 27 cents to US$32,92 a barrel, while May crude on the New York Mercantile Exchange dropped 36 cents to US$36,85 a barrel. Prices fell as analysts expected a report by the US Energy Information Administration (EIA) late yesterday to show a 1,9 million barrel build in crude stocks, as well as 1,45 million barrel rise in gasoline.A decline in crude inventories in last week’s EIA report ended a run of six straight stock builds and helped propel US crude back up towards a 13-year closing price above US$38 stuck last month.Low US gasoline stocks heading into summer holiday driving demand – as well as strong Chinese consumption and fears that rising violence in Iraq could threaten oil supplies – have fuelled a rise of three dollars, or nine per cent, since the start of April.As prices surge, doubts are strengthening over how strictly OPEC producers will enforce a pledge late last month to reduce output by one million bpd, or four per cent, from April 1.OPEC President Purnomo Yusgiantoro said yesterday the oil cartel was producing above its official output limits due to current high crude prices.March production from the OPEC 10 members with quotas was around 2,6 million barrels per above the 23,5 million bpd ceiling that took effect in April.Top OPEC producer Saudi Arabia has scheduled a more than 300,000 bpd increase in crude exports to Asia and Europe for May.State oil firms from fellow Gulf members the UAE and Iran will also supply Asian term buyers with full term volumes in May.Saudi Arabia did not increase exports to the United States, despite recent criticism from the Bush administration of OPEC’s decision to cut production when US gasoline prices are running at record highs.OPEC has said new US environmental fuel regulations and a lack of refinery capacity – rather than any shortage of crude – is to blame for high prices.Rising violence in Iraq has also driven up prices on fears that militants may target oil facilities in the run-up to the planned June 30 handover of power to the Iraqis.The oil chief in Iraq’s US-led administration said on Tuesday that a possible exodus by foreign oil workers from Iraq in response to a spate of kidnappings does not pose an immediate threat to the country’s oil production.”There will be some effect, but the Iraqis have talented personnel who can keep the industry going even if foreigners leave without replacement,” Mike Stinson told Reuters.Iraq has only just restored oil exports to pre-war levels of around two million barrels per day after its post-war recovery was delayed for months by sabotage and looting.The US dollar’s rise to a fresh four-month high against the euro also weighed on prices.Earlier this year a slide in the dollar’s value prompted speculative hedge funds to switch big sums into commodity markets.-Nampa-ReutersPrices fell as analysts expected a report by the US Energy Information Administration (EIA) late yesterday to show a 1,9 million barrel build in crude stocks, as well as 1,45 million barrel rise in gasoline.A decline in crude inventories in last week’s EIA report ended a run of six straight stock builds and helped propel US crude back up towards a 13-year closing price above US$38 stuck last month.Low US gasoline stocks heading into summer holiday driving demand – as well as strong Chinese consumption and fears that rising violence in Iraq could threaten oil supplies – have fuelled a rise of three dollars, or nine per cent, since the start of April.As prices surge, doubts are strengthening over how strictly OPEC producers will enforce a pledge late last month to reduce output by one million bpd, or four per cent, from April 1.OPEC President Purnomo Yusgiantoro said yesterday the oil cartel was producing above its official output limits due to current high crude prices.March production from the OPEC 10 members with quotas was around 2,6 million barrels per above the 23,5 million bpd ceiling that took effect in April.Top OPEC producer Saudi Arabia has scheduled a more than 300,000 bpd increase in crude exports to Asia and Europe for May.State oil firms from fellow Gulf members the UAE and Iran will also supply Asian term buyers with full term volumes in May.Saudi Arabia did not increase exports to the United States, despite recent criticism from the Bush administration of OPEC’s decision to cut production when US gasoline prices are running at record highs.OPEC has said new US environmental fuel regulations and a lack of refinery capacity – rather than any shortage of crude – is to blame for high prices.Rising violence in Iraq has also driven up prices on fears that militants may target oil facilities in the run-up to the planned June 30 handover of power to the Iraqis.The oil chief in Iraq’s US-led administration said on Tuesday that a possible exodus by foreign oil workers from Iraq in response to a spate of kidnappings does not pose an immediate threat to the country’s oil production.”There will be some effect, but the Iraqis have talented personnel who can keep the industry going even if foreigners leave without replacement,” Mike Stinson told Reuters.Iraq has only just restored oil exports to pre-war levels of around two million barrels per day after its post-war recovery was delayed for months by sabotage and looting.The US dollar’s rise to a fresh four-month high against the euro also weighed on prices.Earlier this year a slide in the dollar’s value prompted speculative hedge funds to switch big sums into commodity markets.-Nampa-Reuters