LONDON (Reuters) – Oil prices eased further below $50 a barrel on Tuesday, extending a week-long bout of profit-taking that has cut more than $5 from record-high crude ahead of the U.S. presidential election.
Rising U.S. crude inventories, signs of a slowdown in global economic growth and speculation that an election victory for Senator John Kerry could prove bearish for oil have triggered a 10 percent decline from last Monday’s price peaks.
U.S. crude by 1630 GMT (11:30 a.m. EST) was off 38 cents at $49.70 a barrel following Monday’s $1.63 drop when prices dipped below $50 for the first time in a month.
London Brent crude was off 40 cents at $46.66 a barrel after sliding almost $2 on Monday.
As U.S. electors went to the polls, Even a series of sabotage attacks in Iraq that have closed the country’s northern export pipeline failed to lift prices.
“The news of the Iraqi pipeline is obviously bullish … but the prospect of a Kerry win is coming into the market now,” said broker Paul Goodhew at ABN Amro.
A Kerry election win is thought by some analysts likely to mean lower crude prices than if President Bush were re-elected.
Kerry is on the record saying he would stop filling the U.S. strategic petroleum reserve (SPR), keeping more crude on the open market. The Bush administration continues to buy oil for the emergency reserve, aiming to fill it to capacity next year.
“Kerry has already said he would halt deliveries into the SPR and that would effectively remove 100,000 barrels a day of demand from the market,” said analyst Tim Evans of IFR Energy Services.
Bush’s Democrat challenger is also expected to push energy conservation measures and alternative fuel sources in an bid to curb demand from the world’s biggest energy consuming nation.
Some analysts also say a Bush win could stoke nervousness about U.S. policy in the oil-producing Middle East, particularly Iran, while Kerry is seen as more likely to work through conventional diplomatic channels.
U.S. crude inventories are expected to rise again in weekly government data due out on Wednesday. A Reuters poll forecast crude stocks will rise 2.2 million barrels but projected a modest 600,000 barrel decline in distillates, including heating oil. Signs of slowing growth and falling economic indicators in the U.S., China and Europe are also weighing on oil prices. Lower growth would cut into oil demand.
Global manufacturing growth slowed in October due to fuel costs, leading indicators show, while U.S. third-quarter gross domestic product expanded by less than expected.
China, the world’s second largest energy consumer, is expected to see economic growth slow to 8.5 percent next year after expanding at 9.3 percent in 2004, according to a Reuters poll of 10 regional economists.
Mild weather in the eastern United States has also encouraged some selling of heating oil futures by allowing refiners more time to top up low fuel inventories before demand rises with the onset of winter.