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Crude Falls Below $18 a Barrel
By CLIFF EDWARDS AP Business Writer
Crude oil futures fell below $18 a barrel Wednesday on the
New York Mercantile Exchange after weekly inventory figures
suggested U.S. gasoline inventories will be ample this summer
despite producer cutbacks.
Crude tumbled after the American Petroleum Institute reported
unleaded gasoline inventories jumped 3.66 million barrels last
week to 222.42 million barrels -- more than three times the
average analyst estimates. U.S. Energy Department figures
were even more discouraging, with supplies building by 4.5
million barrels.
The API figures showed implied daily gasoline demand to be
8.38 million barrels, down from an average of 8.6 million
barrels.
Investors now are concerned that after an early promising start
of the driving season, summer demand may not reach record
levels as predicted by the Energy Department.
Some analysts are blaming the cooling demand on rising prices
at the pump, which may have caused drivers in the important
California region in particular to take to the road less.
The gasoline numbers helped reinforce sentiment that the world
may remain awash in oil despite producers' concerted efforts to
push prices higher with slashing output.
Royal Dutch-Shell Group and BP Amoco both acknowledged
that this week they have cut crude processing in Europe because of
poor profit margins. Refiners suffer if the price of the crude they
pay for is far higher than the products that come out of it.
Light, sweet crude for June delivery fell 49 cents to $17.57 a
barrel; June unleaded gasoline fell 1.57 cents to 51.62 cents a
gallon; June heating oil fell .66 cent to 42.43 cents a gallon;
June natural gas fell 4.5 cents to $2.191 for each 1,000 cubic
feet.
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At 09:24 PM 5/12/99 -0700, you wrote:
>Fellow traders,
>
>I would like others views on short-selling crude oil futures.
>The fundamentals look bearish, it's just a matter of time before the OPEC
>and non-OPEC nations reveal that they have not been abiding by the
>production quotas, and the technicals are VERY stretched. All in all, a
>good risk/reward for a short sale at this price.
>Any opposing or supporting views ?
>
>Regards,
>James
>
>http://www.advsoftware.com (soon to be http://www.techtrading.com)
>-----
>
>The energies all fell today after it was disclosed that oil reserves and
>gasoline inventories were higher than recent estimates. June crude (CLM9)
>fell .48 to 17.57 and natural gas (NGM9) dropped 0.41 to 2.191. Unleaded
>gas (HUM9) and heating oil (HOM9) hit 20-day lows, closing at .5162 and
>.4243, respectively.
>
>------------------
>NYMEX Oil Review Part 2
>
>However, the contract held critical support at $17.30
>and partly rebounded amid short covering near trade's close,
>brokers and traders said.
>
>"There was some short covering today," a broker said.
>"We couldn't really break through to the downside."
>Trading in crude was very heavy, with estimated volumes
>at a record high of 243,778 contracts traded, surpassing the
>239,517 crude oil futures contracts traded on Mar 10. "There
>was tremendous amount of spread activity," a broker
>said.
>
>However, fears of US refinery cutbacks triggered more
>negative sentiments, which pressured the complex, brokers
>and traders said.
>
>Recent strength in crude prices was not matched by
>similar gains in products, a disparity that led to poor
>refining margins.
>
>That decline has led many refiners to scale back crude
>processing, traders said, meaning tighter inventories of
>intermediate refinery products used to make gasoline.
>
>Meanwhile, Venezuela's Deputy Energy and Mines Minister
>Alvaro Silva Calderon said that the ministry is estimating a
>$12 a barrel average price for Venezuela's basket of crude
>exports in 1999. He said that every extra dollar the basket
>price rises represents an increase of $1 billion more in oil
>revenues for the year.
>
>OUTLOOK:
>In the absence of fresh news, brokers and traders are
>mixed about Jun crude's direction Thursday.
>
>"We're kind of stuck in a range," one broker said. "We
>need to see a story that is going to take us out of this
>$17.15-$17.80 range."
>
>However, other brokers and traders said crude is
>expected to trade in a lower range Thursday. "It's tough to
>call because crude couldn't break to the downside today,"
>another broker said. "But I think we could go as low as
>$16.80 before we rally it back up."
>
>A trader agreed that lingering negative sentiments
>could continue to pressure the complex. "It's tough to get
>through this number ($17.30), but the market is still
>looking negative," he said. "Speculative longs are getting
>washed out."
>
>If the contract breaks through support at $17.30 and
>later at $17.15, more sell-off could be triggered, pushing
>crude prices below $17.00, a 4-week low.
>---------------------
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