Oil prices weaken as concern on stocks fades
By Kevin Morrison in London and agencies Published: March 19 2003 10:24 | Last Updated: March 19 2003 23:18
The slide in US oil prices accentuated on Wednesday, deepening the rapid fall in prices during the previous four sessions as traders braced themselves for more volatility in the days ahead with the US and UK on the verge of going to war with Iraq.
The key London IPE Brent crude futures contract for May delivery fell further, extending losses as US prices were weakened by fading concern over low commercial oil stockpiles. US oil imports rose in the latest week, according to official data.
"Oil inventories were higher and we can expect to see that trend continue as there is plenty of oil being shipped across the water to the US," said Kevin Norrish, head of commodities research at Barclays Capital.
The Nymex light sweet crude contract for April delivery settled $1.79 lower at $29.88 a barrel in New York. With the April contract ending on Thursday, more activity was seen in the May contract, which lost 70 cents to $29.35 a barrel.
In London, IPE Brent crude oil for May delivery lost 50 cents to $26.75. Despite talk that prices could fall to the lower end of the $22 to $29 per barrel range favoured by Opec, investors were pricing in more modest falls. The December Brent contract traded at $25.60 a barrel on Wednesday and December Nymex light sweet crude at $26.80.
In the latest US weekly inventory reports, both the US Energy Information Agency and the American Petroleum Institute, said crude stocks had risen, but gasoline inventories had fallen and were now heading towards relatively low levels ahead of the US driving season, the biggest consuming period of the year.
Gold sold off contracts as well with spot gold prices finishing at $335.50/$336.26 a troy ounce by the end of New York trading, down from $337.50/$338.25 late on Tuesday. London dealers fixed the afternoon reference price at $335.80.
Spot platinum fell as Japanese investors, who have been one of the major reasons for the white metal hitting a 23-year high recently at $707 an ounce, were selling with higher than average trading volume on Tocom.
A casualty of the falling oil price is rubber, which was pushed to five-year highs last month as rising prices for synthetic rubber, which is made using oil, pushed up natural rubber prices. The August futures contract on Tocom fell ¥1.9 a kilo to ¥128.1, down almost 7 per cent from its peak.