Crude oil futures fell after a US Energy Department report showed rising imports boosted inventories by three times the amount analysts forecast.
Supplies jumped by 6.3 million barrels, or 2.2 per cent, to 289.7 million in the week ended October 29, the biggest increase since March, as imports rose to their highest since September 1, the report said. An addition of 2 million barrels was expected, according to the median forecast among 15 analysts.
“Everyone who has oil has been pumping at maximum, and that will produce lower prices,” said John Caiazzo, president of commodity brokerage Acuvest in Temecula, California. “Oil belongs at US$30 to US$35 per barrel.”
Crude for December delivery was at US$50.55 a barrel in after-hours electronic trading on the New York Mercantile Exchange, down 33 cents, or 0.7 per cent, at 1:43 pm yesterday Singapore time. December Brent futures fell 51 cents, or 1.1 per cent, to US$47.05 a barrel on London’s International Petroleum Exchange.
Futures in New York on Wednesday fell as low as US$48.65, the cheapest since September 29, in the first hour of floor trading after the Energy Department report. Prices later rose by more than US$1 to close at US$50.88 a barrel on the re-election of President George W. Bush, whose policies include buying oil for a government stockpile.
Deliveries of about 100,000 barrels a day to the US Strategic Petroleum Reserve and the US-led occupation of Iraq sapped supply at a time of rising global demand, contributing to a 76 per cent surge in prices in the past year. Bush plans to add at least 57 million barrels more of oil to guard against disruption in supplies.
“It would be very dangerous not to keep filling the reserve,” said Kjell Aleklett, president of Uppsala, Sweden-based Association for the Study of Peak Oil & Gas, an energy researcher. “We’ve seen how easy it is for production to be cut from Nigeria, Iraq and Venezuela, and spare capacity is very tight.”
In Russia, OAO Yukos Oil Co, the country’s biggest oil exporter, will ask shareholders to consider declaring bankruptcy to protect assets after the government this week demanded an extra US$9 billion in back taxes. The tax claims against Yukos have raised concern about possible supply disruptions from Russia, the world’s second-biggest oil exporter behind Saudi Arabia.
Bush won a second term, receiving at least 274 electoral votes, four more than needed for victory. He also won the popular vote, 51 per cent to 48 per cent, receiving 3.5 million more votes than Democrat John Kerry.
New York oil futures reached US$55.67 on October 25, the highest since futures began trading in 1983. The Bush administration’s decision to keep adding oil to the country’s emergency stockpile has added pressure on prices.
“As it became apparent that Bush was doing better than the exit polls suggested, crude came back,” said Chris Mennis, owner of New Wave Energy in Aptos, California. “If Kerry won, there would have been less oil going into the reserve. We’ve probably hit the low watermark for crude.”
The US reserve has 670.7 million barrels of oil stored in salt caverns along the Gulf of Mexico in Texas and Louisiana.