Natural-gas futures hold steady ahead of U.S. supply data
By Polya Lesova and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures fell Thursday morning, extending the previous session’s losses, as the International Energy Agency warned that high oil prices are resulting in lower demand, especially in the U.S.
Crude oil for June delivery CLM11 -0.57% shed $1.63, or 1.7%, to $96.58 a barrel on the New York Mercantile Exchange.
In its monthly oil report released Thursday, the IEA said preliminary March data suggest near zero annual growth in global oil demand for the first time since the summer of 2009.
“While March estimates are probably distorted by exceptional events in Japan and the timing of Easter holidays, nonetheless $4-a-gallon gasoline is likely to yield an anemic U.S. driving season,” the IEA said. “This is the main change to our demand forecast — a weaker 2011 profile in North America.”
The IEA report offered “the first serious acknowledgment of the damage high energy prices are inflicting upon the global economy,” said John Kilduff, founder of the Kilduff Group, in a morning note. “This should dispel the notion that the breaking point for consumers is another dollar or so per gallon of gasoline away.”
The IEA trimmed its growth forecast for global oil-product demand in 2011 to 1.3 million barrels a day, citing persistent high prices and weaker projections for advanced economies. Global oil demand is now expected to reach 89.2 million barrels a day in 2011, which is 190,000 barrels a day less when compared with earlier projections.
In recent dealings, Brent crude fell $1.72 to $110.85 a barrel on the ICE Futures in Europe.
The latest round of U.S. economic data, however, was “somewhat supportive,” for the petroleum market, said Kilduff.
June crude had touched a low of $95.25, then briefly pared losses after economic data were released.
The U.S. Labor Department reported a fall in the number of people filing initial requests for jobless benefits in the week ended May 7. Read about the jobless-claims data.
U.S. retail sales also climbed in April for the 10th month in a row, according to the Commerce Department. Read about retail sales.
On Wednesday, the June crude contract slumped $5.67, or 5.5%, in New York, prompting the CME Group CME -0.80% to take the unusual step of briefly halting trade in order to allow the market to settle down.
Wednesday’s selloff was triggered by a bigger-than-expected increase in U.S. oil inventories. Crude inventories rose by 3.8 million barrels in the week ended May 6, and gasoline supplies increased by 1.3 million barrels, according to U.S. government data.
Analysts at MF Global also attributed the sharp drop to China’s monthly inflation figures released Wednesday. The data showed the year-on-year rate of increase eased a little in April from the level in March, but at 5.3%, still remained at elevated levels, keeping alive concerns that Beijing may introduce more monetary-tightening measures in the months ahead. Read full story on the Chinese data.
Natural gas data on tap
Energy traders also awaited a weekly update on U.S. natural-gas supplies in storage for the week ended May 6, due out shortly from the Energy Information Administration.
Analysts surveyed by Platts expect data to show a rise of 67 billion to 71 billion cubic feet for the week ending May 6.
Ahead of the data, June natural gas was little changed at $4.18 per million British thermal units.
June gasoline was also 6.58 cents lower at $3.06 a gallon, and June heating oil lost 2.5 cents at $2.87 a gallon.
