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KingPriest2
04-07-2005, 12:26 PM
Oil prices tumble

Crude follows gasoline futures lower to trade below $54 a barrel.
April 7, 2005: 2:20 PM EDT




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LONDON (Reuters) - Oil slid almost $2 a barrel Thursday, dragged further from recent record highs by rising inventories in the United States and a big drop in gasoline futures.

U.S. light crude for May delivery sank $1.80, or about 3 percent, to $54.05 a barrel, some $4 below Monday's record trading high of $58.28. London Brent crude fell $1.23 to $53.65 a barrel.

U.S. crude prices have surged about 25 percent this year, driven by concerns that rapidly rising energy demand in Asia's emerging economies, especially China and India, could outpace supply growth.

Confidence in the rally's resilience has waned after crude oil stocks in the United States rose for an eighth straight week to the highest level since June 2002, spurring some big-money funds to liquidate buying positions.

"Crude inventories are not tight enough to justify current prices," said J.P. Morgan bank in a report.

Prices have been supported by tightening U.S. gasoline stocks ahead of peak summer vacation driving demand, but gasoline led the slide Thursday, dropping 10 cents a gallon, or 6 percent.

Analysts have also identified signals of slowing demand growth in China.

Top world exporter Saudi Arabia has said it wants to help build stocks in time for an expected fourth quarter surge in demand.

The kingdom cut its official crude prices to European and U.S. customers this week to make its lower-quality oil more attractive to buyers.

Prices for crude later this year are currently more expensive than near-term prices, encouraging refiners to buy oil now and store it for later use. September prices are the highest and are more than $2 above May.

Saudi Arabia is the biggest producer in the Organization of the Petroleum Exporting Countries which raised output limits by 500,000 barrels per day (bpd) to 27.5 million bpd last month in a bid to cool prices.

Saudi Arabia itself produced nearly 9.4 million bpd last month, a Reuters survey showed. Some dealers believe the kingdom will struggle to place much more oil without further cuts to its own selling prices for the lower-quality oil.

"Most of the Saudi production beyond 9.6 million bpd will be heavy barrels and right now it's just not economical to refine them," said a trader.

OPEC left room for a second 500,000 bpd increase before a June meeting if prices failed to drop below $55. The group began talks on whether to trigger the second increase last weekend and said then they could decide within two weeks.

bkkcoh
04-07-2005, 12:30 PM
too late, $2.00 a gallon gas sounds like a bargain since it was upwards of $2.50 or more.

Isn't that a sad fact of life.