Oil futures prices fell more than $1 a barrel Thursday afternoon, following the lead of gasoline futures, and brokers said there appeared to be further momentum lower. "It's collapsing," said Ed Silliere, a broker at Energy Merchant Intermarket Futures in New York. "The market was extremely overbought." Light, sweet crude for May delivery dropped $1.45 to $54.40 a barrel in afternoon trade on the New York Mercantile Exchange. After an early decline of nearly 8 cents, gasoline futures recovered some lost ground and were down 4 cents to $1.62.
On Wednesday the U.S. Energy Department said the supply of unleaded gasoline stood at 212.3 million barrels, or 5.5 percent higher than last year. However, gasoline demand remained healthy, up 2 percent from a year ago. Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures, said he expects high gasoline prices to persist as "people are accumulating inventories before the summer driving season." The government report also showed that the nation's inventory of crude oil was 317.1 million barrels, or 8 percent higher than last year.
"U.S. oil demand is holding up well, and will help to support prices at lower levels," investment bank Barclays Capital said in a note. "There is ... nothing in the U.S. data to support another push up toward $60 yet." Emori said the current oil market remains "highly exaggerated," and that if prices followed market fundamentals, they should hover around the low $40 range. |