Oil prices reverse as inventory promises better stocks

Oil prices hit a six-week low Wednesday as IPE Brent prices for a barrel of oil fell a further 42 cents to $51.56 for May delivery after it had lost $1.23 on Tuesday.

Brent’s price per barrel for June’s contract fell to $52.52. Nymax WTI’s price on May delivery crude oil also fell, with a loss of 42 cents to $51.44 per barrel.

Nymax’s prices had seen a drop of $1.85 on Tuesday. These prices were a six-week low and came in anticipation of US weekly crude oil inventory figures. That report is expected to show another rise in stockpiles of crude oil.

Another reason for the drop in crude oil prices is the revised estimate of 2005 global oil demand recently released by the International Energy Agency (IEA).

The IEA said that global oil demand is lessening and in response revised down its estimate of 2005 oil demand by 50,000 barrels a day.

One of the reasons for that downward revision was the perception that China’s demand for crude oil is slowing down. OPEC does not share that perception, saying that China’s demand for crude oil was strong in March and that the trend is continuing in April.

The oil demand predictions from the IEA have not been seen as particularly accurate the past two years.

Story link: Oil prices reverse as inventory promises better stocks