Crude declined for a second day after the International Energy Agency trimmed its 2011 oil demand growth forecast for the first time as this year’s price rally begins to weigh on consumption.
Oil fell as much as 3 percent after the agency cut its projection for global fuel consumption by 190,000 barrels a day, or 0.2 percent. U.S. gasoline use will drop this year as pump prices compel motorists to drive less this summer, according to the IEA’s monthly market report. U.S. crude supplies rose to a two-year high, the Energy Department said yesterday. Citigroup Inc. today cut its three-month crude-oil forecasts.
“High gasoline prices are scaring off some incremental demand,” said Rick Mueller, a principal with ESAI Energy, LLC in Wakefield, Massachusetts. “We’re going to see people conserve more and cut down on trips.”
Crude oil for June delivery fell 39 cents, or 0.4 percent, to $96.82 a barrel at 9:09 a.m. on the New York Mercantile Exchange. Futures are up 29 percent from a year earlier.
Brent oil for June settlement fell 39 cents, or 0.4 percent, to $112.18 a barrel on the London-based ICE Futures Europe exchange.
Fuel demand in North America will decline this year by 190,000 barrels a day to 23.7 million a day. The IEA lowered its forecast for the region by 220,000 barrels a day from last month’s report, citing lower growth projections from the International Monetary Fund.
`Reinforces View'
“The IEA cut reinforces the views around slowing global economic performance,” said Paul Harris, head of natural resources risk management at Bank of Ireland in Dublin. “We are focusing on U.S. economic prospects after inventory data.”
Crude inventories in the U.S increased 3.78 million barrels to 370.3 million last week, the highest level since May 2009, an Energy Department report showed. Gasoline demand fell for a second week.
CME Group Inc., the Nymex owner, this week raised margins for crude oil, gasoline and heating oil futures on the New York Mercantile Exchange. The exchange increased crude oil margins for speculators to $8,438 per contract from $6,750, effective after the close of business on May 10.
“They’ve raised the margin requirements more than 20 percent,” said Roland Stenzel, an oil trader at E&T Energie Handelsgesellschaft mbH in Vienna. “That’s not helping the market. The more you want to trade, the more money you’ll have to put aside.”
CME also raised trading margins for gasoline contracts to $11,475 per lot from $9,450, effective after the close of business today.
Citigroup today revised down its three-month Brent crude forecast to $110 a barrel and for West Texas Intermediate, the grade traded in New York, to $100.
“Renewed concerns about U.S. growth, rising U.S. crude oil inventories and stretched speculative long positioning support our revisions,” a team led by London-based Guillermo Felices wrote in a report today.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
