Oil Prices Fall to US$ 53.22 a Barrel
SINGAPORE, Jan 11, 2007 (AP Online via COMTEX) -- Oil prices extended declines in Asian trading Thursday after U.S. government data showed a larger-than-expected increase in domestic inventories of gasoline and heating oil.
Light, sweet crude for February delivery dropped 80 cents to US.22 on the New York Mercantile Exchange in electronic trading mid-afternoon in Singapore. The contract fell US.62 to end at a 19-month low of US.02 a barrel Wednesday.
Brent crude contract for February delivery dipped 89 cents to US.80 a barrel on the ICE Futures exchange in London.
Oil prices have declined more than 11 percent the past two weeks, as speculators have bid down futures on expectations of lower winter demand and a belief that the Organization of Petroleum Exporting Countries lacks the discipline to comply with its recent output cuts.
The U.S. Energy Information Administration reported that commercial stockpiles of gasoline jumped 3.8 million barrels last week to 213.3 million barrels, while inventories of distillate fuels, which include heating oil, climbed 5.4 million barrels to 141 million barrels.
"The market is overwhelmingly bearish and in Asia, the market is reacting to the very bearish product increase which went up quite a bit," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
It's not just energy prices that have been falling. The broader commodities market have taken a hit in 2007 by what some analysts say has been an exodus of investment fund money. Industrial metals such as copper, and precious metals including gold, have dropped since the year began.
"The financial market is rebalancing its portfolio and shifting money out of commodities. Oil has been plunging together with metals," Shum said.
Adding to the selling pressure Thursday was news that Russia and Belarus had resolved their dispute over oil supplies. Russian oil was flowing again through a Belarusian pipeline late Wednesday, according to Belarusian official Alexei Kostuchenko, general director of pipeline operator Gomeltransneft-Druzhba.
Crude oil's steep decline has spurred predictions of further losses and even an end to the eight-year bull market, which extended from a low of US.35 in 1998 to the record highs of last summer.
Speculators who for years bet on rising energy prices have started adding to bets on falling prices, according to the latest U.S. government data.
"I've already said last year that oil prices should be going towards US a barrel so there's nothing special. It's no surprise to see it drop below US," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Heating oil futures lost 1.25 cents to US.5130 while natural gas prices dipped 15.5 cents to US.600 per 1,000 cubic feet