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Oil slips towards $76 as demand lags economic recovery - Daily News Egypt

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Oil slips towards $76 as demand lags economic recovery

LONDON: Oil fell towards $76 a barrel on Thursday as rising crude inventories in the United States signaled a rebound in US economic activity was failing to translate into higher demand. US crude for March delivery declined 74 cents to $76.24 a barrel at 1228 GMT, while London ICE Brent shed 76 cents to $75.16. …


LONDON: Oil fell towards $76 a barrel on Thursday as rising crude inventories in the United States signaled a rebound in US economic activity was failing to translate into higher demand.

US crude for March delivery declined 74 cents to $76.24 a barrel at 1228 GMT, while London ICE Brent shed 76 cents to $75.16.

A government report on Wednesday showed US crude stockpiles rose by more than expected as imports jumped and refineries kept operating at unusually low rates.

Although manufacturing has picked up, US demand for distillate fuel, including diesel, was more than 9 percent lower in January than last year, according to the US Department of Energy.

US oil refineries are now operating at just 77.7 percent of capacity, the lowest recorded level since 1990 barring hurricane disruptions.

There was not much inspiring on the demand side, with total product demand down 2 percent from a year ago, MF Global analyst Edward Meir said.

We suspect that the bias in energy will be lower over the next two days, particularly if the dollar continues to regain its footing.

The dollar rose to a seven-month high against the euro on Thursday. Strength in the greenback often pressures dollar-priced commodities as they become more expensive for holders of other currencies.

Industrial Demand

Oil has rebounded by more than $4 this week from a six-week low of $72.43 on Jan. 29. But prices are still far from a 15-month high close to $84 reached on Jan. 11 and well below the record peak close to $150 in July 2008.

Employment data out in the United States on Friday is expected to provide the next indication of the pace of economic recovery.

Non-farm payrolls are expected to have increased by 8,000 in January, the second monthly gain since the recession started in December 2007, according to 20 forecasters polled by Reuters.

Some energy analysts, including Barclays Capital s Paul Horsnell, head of commodities research, remain upbeat that industrial demand for oil will soon recover.

The evidence of a recovery in manufacturing, better trucking indications and a slow turning of the manufacturing goods inventory cycle all still point to an improvement in diesel demand that will eventually percolate through to the data, Horsnell said in an e-mailed note.

Royal Dutch Shell Plc posted a 75 percent fall in fourth-quarter profits to $1.18 billion on Thursday, as the oil major was punished for falling output and its focus on the depressed refining and natural gas businesses.

Full year output from Europe s second largest oil company was down 3 percent, while low refining margins hit the firm with a $1.76 billion loss at its oil processing arm.

Weak demand has seen the price of oil products like gasoline and diesel struggle to keep pace with relatively high crude prices. Crude has been supported during the global slowdown by expectations booming demand from emerging markets could outstrip supplies in the future.

State-owned Chinese oil firm CNPC expects China s crude oil imports to increase 9.1 percent to 212 million tons in 2010, or 4.24 million barrels per day, a company report showed on Thursday.

China s apparent oil demand will grow more than 5 percent to 427 million tons this year, or 8.54 million barrels per day (bpd), the report said. -Additional reporting by Alejandro Barbajosa in Singapore.

Topics: FJP

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https://www.dailynewsegypt.com/2010/02/04/oil-slips-towards-76-as-demand-lags-economic-recovery/
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