• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Oil Prices Fall to About $87 a Barrel

Posted on: Thursday, 6 December 2007, 09:00 CST

By PABLO GORONDI

Oil prices dropped to about $87 a barrel on Thursday, the lowest in six weeks, after a report showed an increase in U.S. supplies of gasoline and distillates. The market also was buoyed by a rise of crude supplies at a key U.S. terminal.

Traders shrugged off news like OPEC's decision to keep production levels steady and a big drop in overall U.S. crude stockpiles and took profits before prices fell further.

"For only one of a handful of times this year, bulls are on the run," wrote Stephen Schork, a U.S. trader and analyst in a research note. "For the time being, it appears the threat of $100 (a barrel) has been pushed to the back burner."

Ministers from the Organization of Petroleum Exporting Countries said Wednesday in Abu Dhabi in the United Arab Emirates that the cartel would leave output unchanged "for the time being" because the world was "well supplied" with crude.

Light, sweet crude for January delivery fell 75 cents to $86.74 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Europe. The contract had fallen 83 cents Wednesday to settle at $87.49 a barrel, oil's lowest close since Oct. 24.

In London, January Brent crude futures fell $1.20 to $87.29 a barrel on the ICE Futures exchange.

Oil prices have dropped more than $10 from all time-highs near $100 in November on evidence of rising inventories at Cushing, Okla., the closely watched Nymex delivery terminal. Speculation that OPEC would boost supplies and evidence that some OPEC countries are producing above their quotas also have pressured prices.

OPEC ministers plan to meet Feb. 1 to review their decision.

Meanwhile, the U.S. Energy Department's Energy Information Administration reported that crude supplies plunged 8 million barrels last week, much more than the expected 700,000 barrel decline.

But the report was mixed as it also said crude inventories in Cushing rose 700,000 barrels during the week ended Nov. 30, the third week in a row supplies there have grown.

Activity at the Cushing terminal is studied closely by oil traders because it is the physical delivery point for Nymex crude. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise.

Refinery activity was unchanged last week at 89.4 percent of capacity. Analysts surveyed by Dow Jones Newswires, on average, had expected refinery utilization to rise slightly.

Supplies of gasoline rose 4 million barrels, much more than the 700,000-barrel increase analysts had expected. Inventories of distillates, which include heating oil and diesel fuel, rose 1.4 million barrels, countering analyst expectations for a 400,000-barrel decline.

Some of the decline in crude supplies can be explained by oil imports, which fell last week by an average of 980,000 barrels a day to 9.4 million barrels a day. Gasoline imports rose 334,000 barrels a day last week to an average of 1.2 million barrels a day.

Gasoline demand slid last week by about 90,000 barrels, but is up 0.2 percent over the last four weeks compared to the same period last year, the EIA said. Analysts consider year-over-year demand growth of less than 1.5 percent to be low.

Heating oil futures dropped 1.68 cents to $2.4725 a gallon, while gasoline prices lost 0.97 cents to $2.2073 a gallon. Natural gas futures added 18 cents to $7.365 per 1,000 cubic feet.

---

Associated Press writer Gillian Wong in Singapore contributed to this report.

Source: Associated Press/AP Online

More News in this Category