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link: http://money.cnn.com/2005/06/30/markets/oil.reut/index.htm
Oil sinks further, below $57
Crude prices continue two-day sell-off following Wednesday's data on rising crude inventory in U.S.
June 30, 2005: 2:44 PM EDT
LONDON (Reuters) - Oil prices fell below $57 a barrel on Thursday, extending a steep sell-off from record highs after an unexpected rise in U.S. crude stockpiles.
U.S. crude for August fell 76 cents to $56.50 a barrel after a six percent slide in two days from Monday's all-time peak of $60.95. London Brent fell 41 cents to $56.85 a barrel.
Wednesday's weekly U.S. inventory report showed near-record crude imports by the world's top consumer, helping to boost crude stocks by 1.1 million barrels despite refineries operating near capacity.
"Obviously, crude stocks building when refiners run flat-out -- as they are now -- is bearish for crude," said SG Commodities in a report.
U.S. refinery utilization rates rose 1.5 percentage points to 96.3 percent, helping to boost stocks of distillates, the high-demand fuel group that includes diesel and heating oil, the U.S. Energy Information Administration report showed.
The report showed four-week average demand growth for distillates easing to 5.7 percent from nearly seven percent the previous week. Demand growth rates for distillates remained strong enough to cause concern about fourth quarter inventories when seasonal consumption peaks.
Global economic growth
Dealers are watching for signs inflated energy costs are biting into world economic growth, in turn slowing the oil demand growth that is testing global crude production and refining capacity.
Global growth will slow to three percent this year from 4.1 percent last year because of high energy prices and rising interest rates, U.N. forecasters said Wednesday, the latest group to see soaring oil blunting, but not derailing, expansion.
European Union growth expectations may be downgraded should prices stay higher, the European Commission said.
"Now oil prices are at $60 per barrel and that constitutes a real risk for European growth. If this continues, growth rates will suffer," Economic and Monetary Affairs Commissioner Joaquin Almunia said.
Speculative hedge funds, which have been plowing money into a range of commodities over the past two years, sparked this week's reversal partly because of end-of-quarter book-keeping, traders said.
The Reuters/Jefferies CRB Index of 19 commodity futures has tumbled 2.7 percent since Monday but is still up 69 percent from two years ago.
The flow of fresh cash into the benchmark Goldman Sachs Commodity Index (GSCI), the biggest of a range of indices that together hold investment of more than $50 billion, has also slowed compared with a boom last year.
But commodities funds say oil remains a long-term bet for investors seeking to offset the risk of a poor returns in other asset classes.
"The higher the oil price gets, the closer you get to the point where it really damages assets in your portfolio other than commodities," said Jelle Beenen of Dutch pension fund PGGM.
The Organization of the Petroleum Exporting Countries has started talks this week on raising output by 500,000 barrels per day (bpd).
The cartel is already close to full capacity and says refinery bottlenecks are to blame for high prices.
OPEC could decide on the increase this week, pending a cartel study on supply and demand, the group's president has said.
On Thursday, Algerian Energy and Mining Minister Chakib Khelil said he did not think ministers had reached consensus yet on the need for increasing production, but added: "We in Algeria are in favor."
link: http://money.cnn.com/2005/06/30/markets/oil.reut/index.htm
Oil sinks further, below $57
Crude prices continue two-day sell-off following Wednesday's data on rising crude inventory in U.S.
June 30, 2005: 2:44 PM EDT
LONDON (Reuters) - Oil prices fell below $57 a barrel on Thursday, extending a steep sell-off from record highs after an unexpected rise in U.S. crude stockpiles.
U.S. crude for August fell 76 cents to $56.50 a barrel after a six percent slide in two days from Monday's all-time peak of $60.95. London Brent fell 41 cents to $56.85 a barrel.
Wednesday's weekly U.S. inventory report showed near-record crude imports by the world's top consumer, helping to boost crude stocks by 1.1 million barrels despite refineries operating near capacity.
"Obviously, crude stocks building when refiners run flat-out -- as they are now -- is bearish for crude," said SG Commodities in a report.
U.S. refinery utilization rates rose 1.5 percentage points to 96.3 percent, helping to boost stocks of distillates, the high-demand fuel group that includes diesel and heating oil, the U.S. Energy Information Administration report showed.
The report showed four-week average demand growth for distillates easing to 5.7 percent from nearly seven percent the previous week. Demand growth rates for distillates remained strong enough to cause concern about fourth quarter inventories when seasonal consumption peaks.
Global economic growth
Dealers are watching for signs inflated energy costs are biting into world economic growth, in turn slowing the oil demand growth that is testing global crude production and refining capacity.
Global growth will slow to three percent this year from 4.1 percent last year because of high energy prices and rising interest rates, U.N. forecasters said Wednesday, the latest group to see soaring oil blunting, but not derailing, expansion.
European Union growth expectations may be downgraded should prices stay higher, the European Commission said.
"Now oil prices are at $60 per barrel and that constitutes a real risk for European growth. If this continues, growth rates will suffer," Economic and Monetary Affairs Commissioner Joaquin Almunia said.
Speculative hedge funds, which have been plowing money into a range of commodities over the past two years, sparked this week's reversal partly because of end-of-quarter book-keeping, traders said.
The Reuters/Jefferies CRB Index of 19 commodity futures has tumbled 2.7 percent since Monday but is still up 69 percent from two years ago.
The flow of fresh cash into the benchmark Goldman Sachs Commodity Index (GSCI), the biggest of a range of indices that together hold investment of more than $50 billion, has also slowed compared with a boom last year.
But commodities funds say oil remains a long-term bet for investors seeking to offset the risk of a poor returns in other asset classes.
"The higher the oil price gets, the closer you get to the point where it really damages assets in your portfolio other than commodities," said Jelle Beenen of Dutch pension fund PGGM.
The Organization of the Petroleum Exporting Countries has started talks this week on raising output by 500,000 barrels per day (bpd).
The cartel is already close to full capacity and says refinery bottlenecks are to blame for high prices.
OPEC could decide on the increase this week, pending a cartel study on supply and demand, the group's president has said.
On Thursday, Algerian Energy and Mining Minister Chakib Khelil said he did not think ministers had reached consensus yet on the need for increasing production, but added: "We in Algeria are in favor."
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