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Oil Prices Start To Slide After IEA Says Growth Slid
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Article Date: 2005-05-11
Crude oil futures started dropping this morning in early morning trading after the IEA said oil demand had dropped in the U.S., China, and in Europe. Light sweet crude has already dropped over 74 cents this morning to $51.33. Brent North Sea crude has dropped 64 cents to $50.79 and gasoline futures are also trading down over 2 cents at $1.48 a gallon.
The IEA report said the U.S. consumption dropped by 90,000 to 250,000 bpd or a 1.7% drop. Chinese economic growth, while still going, didn't climb nearly as much this year limiting their projections 470,000 bpd, this 7.4% is less than half of last years 16% from last year.
Europe really bottomed going down 170,000 bpd, down 1.1% from last year. With slower economic growth, heating oil isn't being purchased so much either. This trend of slowing economic growth in a number of countries may continue to shrink projections for the coming year and certainly in the fourth quarter.
The IEA also said non-OPEC oil countries had slightly higher projections too growing 55,000 barrels to 955,000 bpd. Right now, OPEC is running nearly full capacity and certainly the largest capacity in 25 years. Also, the U.S. Energy Dept. will put out energy reports in minutes and crude inventories are expected climb another million and a half barrels.
All this happens despite other issues going on in the market too. Conoco/Phillips had power problems at their Louisiana facility and production will be down for two weeks. This doesn't bode well as that facility has already had a number of unscheduled maintenance problems this year when refineries are running near capacity to prepare for the summer driving months, which start in a couple of weeks.
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