Crude Oil Falls on Expected Further Builds in U.S. Inventories
By Angela Macdonald-Smith
Sydney, May 6 (<a href=quote.bloomberg.com>Bloomberg) -- Crude oil fell on expectations that a decline in production from the Organization of Petroleum Exporting Countries won't prevent further increases in U.S. inventories in the weeks ahead.
OPEC's April oil production fell 3.6 percent to 26.54 million barrels a day, according to a Bloomberg survey of oil companies, producers and analysts. Still, excluding Iraq, output rose one percent to 26.4 million barrels, 1.9 million barrels a day above quota. U.S. crude inventories rose 10.8 million barrels in the two weeks up to April 25.
I wouldn't be surprised to see a five or six million barrel build this next week,'' said Mike Armbruster, energy analyst and broker with Altavest Worldwide Trading Inc. in Laguna Hills, California. It's going to be another month down the road before OPEC's reduced production really starts to be reflected in our data.''
Crude oil for June delivery fell as much as 19 cents, or 0.7 percent, to $26.30 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Oil traded at $26.45 a barrel at 10:01 a.m. Sydney time.
Yesterday, oil rose 82 cents, or 3.2 percent, to $26.49 a barrel in regular floor trading, the biggest one-day increase since April 17, on speculation that grades of gasoline used in the biggest U.S. cities may be in short supply when demand peaks this summer.
Oil production by OPEC reached a 1 1/2-year high in March as members replaced Iraqi oil that was cut off by war. Iraq's oil output last month fell to 140,000 barrels a day from an average of 1.4 million barrels daily in March as a U.S.-led invasion disrupted the nation's oil industry, the Bloomberg survey showed.
The biggest increase was in Venezuela, where production is recovering from a strike. Venezuelan output rose 340,000 barrels, or 15 percent, to 2.59 million barrels a day.
OPEC members agreed last month to cut oil output starting June 1 to keep prices from falling. The producer group is scheduled to meet again on June 11, when it may decide to cut supply again, ministers said.
OPEC aims to keep an index of crude-oil grades it monitors between $22 and $28 a barrel. The so-called basket price was quoted at $23.84 a barrel on May 2, down 28 percent from $33.11 on March 10. Last Updated: May 5, 2003 20:20 EDT