Markets: Pricing oil like it’s 2007

Nymex July West Texas Intermediate fell $1.48 to $60.56 a barrel after reaching a six-month high of $62.26 in the previous session.

ICE July Brent lost $1.33 at $59.26 a barrel.

Harry Tchilinguirian, senior oil analyst at BNP Paribas, said that it was “remarkable” that under current economic conditions and faced with high levels of crude oil inventories that oil prices had returned to $60 a barrel.

BNP noted that $60 a barrel was a level crossed in 2007 when the world economy was growing at around 5 per cent, spare production capacity in Opec countries had dwindled to just above 2m barrels a day and constraints in non-Opec supplies were emerging.

“With the exception of non Opec supply, none of those conditions apply this year, and yet we are at $60 a barrel.”

US inventories data released on Wednesday showed larger-than-expected falls in crude and petrol stocks ahead of the start of the US summer driving season on Monday.

US crude stocks fell by 2.1m barrels last week, above the consensus forecast for a decline of 200,000 barrels. Crude imports remained below the 9m-barrel-a-day level, rising 83,000 b/d to 8.79m b/d last week.

Refinery utilisation was also weaker than expected, down 1.9 percentage points to 81.8 per cent whereas most analysts had been expecting a modest increase.

Petrol stocks dropped by 4.3m barrels, well above the consensus forecast for a fall of 1.2m barrels, which dealers attributed to retailers stockbuilding heading into the summer driving season.

US retail prices for petrol have fallen about half compared with last summer, which traders expect to bolster consumption.

Read the full commodities report on FT.com

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