- The Washington Times - Wednesday, March 23, 2005


Oil prices sank more than $2 a barrel yesterday with rising crude supplies in the United States, a strengthening dollar and signs that China’s energy appetite, while still growing, has its limits.

Rising interest rates, which could slow economic growth and energy demand, were also a factor. Brokers noted that technical and speculative trading magnified the sell-off.

“When you run up quickly, you can also come off very quickly,” said Tom Bentz, a broker with BNP Paribas Commodity Futures in New York.

Light, sweet crude fell $2.22, or 4 percent, to settle at $53.81 per barrel on the New York Mercantile Exchange, where oil futures are down nearly $4 a barrel since the intraday high of $57.60 set March 17.

In London, Brent crude for May delivery settled at $53.04, down $1.55 on the International Petroleum Exchange.

Oil is roughly 45 percent more expensive than a year ago but still well below the inflation-adjusted peak above $90 a barrel set in 1980.

Prices at the pump are also soaring. Nationwide, a gallon of regular unleaded averages $2.11, up 21 percent from a year ago, with half of that gain coming in the past month.

Unleaded gasoline for April delivery settled unchanged on Nymex at $1.5749 per gallon. But after markets closed, gasoline futures zoomed several cents higher in electronic trading as the result of an explosion at a massive BP refinery complex in Texas City, Texas.

It was not immediately clear what type of production at the 1,200-acre facility would be affected, and for how long, but traders said any prolonged shutdown that affected gasoline output could keep the market on edge heading into the summer driving season. BP’s Web site says the refinery produces 3 percent of all the gasoline consumed in the United States.

For the moment, the country has an ample supply of gasoline, analysts said. They cited the latest U.S. Energy Department report, which showed inventories of gasoline 8 percent higher than a year ago despite a decline of 4.1 million barrels last week to 217.3 million barrels.

The agency also said in its weekly report that crude oil inventories rose by 4.1 million barrels last week to 309.3 million barrels, or 8 percent above year-ago levels.

The rise in U.S. oil supplies coincided with evidence that the growth in oil demand in China may be slowing.

“The whole Asian region is now in the process of lower growth demand,” said Frederic Lasserre of SG Securities in Paris.

Mr. Lasserre suggested that crude prices should be no higher than the mid-$40s, saying that supply fears over the past few months had resulted a “premium of at least $8 to $9” a barrel over market fundamentals.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide