Oil Prices Fall On Inventory Concerns
Thursday, April 19th 2007, 11:43 am
News On 6
NEW YORK (AP) _ Oil prices tumbled Thursday as traders focused on inventory buildups at a key Oklahoma oil terminal and on a general sell-off in May futures contracts, which expires Friday.
A February fire that shuttered Valero's McKee refinery in Texas has caused crude inventories to build up at an oil terminal in Cushing, Okla. The refinery coming back online this week had caused a bottleneck, said John Kingston, director of oil at Platts, a division of McGraw-Hill Cos.
``There's plenty of oil hanging around in Cushing right now,'' agreed Phil Flynn, analyst at Alaron Trading Corp., in Chicago.
Light, sweet crude for May delivery slipped $1.53 to $61.60 a barrel in late morning trading on the New York Mercantile Exchange. The contract, which expires Friday, follows a recent pattern in which contracts sell off just before expiring, Flynn said.
``It seems that these expirations have become an exercise in bottoming out and selling off,'' Flynn said.
The June contract was also off, though not as much, down 97 cents a barrel to $63.41.
Brent crude for June delivery, in contrast, rose 13 cents to $66.17 a barrel on the ICE Futures exchange in London. Brent inventories have not been affected by the McKee closure, analysts said.
Gasoline futures were off less than a cent at $2.0828 a gallon.
Also affecting prices on Thursday was news that the Chinese government might attempt to stem the country's economic growth. China's gross domestic product grew 11.1 percent in the first quarter.
A more slowly growing China would use less oil.
``This has put a negative impact on the market overall,'' Flynn said.
Kingston cautioned against reading too much into oil prices over the next couple of days, due to the expiring May contract.
``You've just got a lot of wacky things going on now,'' Kingston said.
Traders continue to watch the situation in Nigeria, where there have been scattered reports of violence this week ahead of Saturday's presidential elections. Oil markets seem more focused on reports that a major Nigerian oil field could come back online by the end of May.
``If anything, the news out of Nigeria is good,'' Kingston said.
Nigeria is the world's eighth-largest oil exporter and a main supplier to the United States. Last week, 21 Nigerians were killed in violence surrounding state elections.
In other Nymex trading, heating oil futures were off less than a cent to $1.8064 a gallon while natural gas prices lost 2.1 cents to $7.476 per 1,000 cubic feet.