WORLD / Top News

Oil prices fall below US$72 on weakening U.S. demand
Updated: 2006-04-27 10:43

Oil prices eased Thursday after U.S. government data showed motor-fuel demand weakening, apparently in response to higher pump prices.

The data also showed that domestic inventories of gasoline shrank for the eighth consecutive week, and that may have moderated the selling, analysts said.

Light, sweet crude for June delivery fell 20 cents to US$71.73 a barrel in Asian electronic trading on the New York Mercantile Exchange midmorning in Singapore. The contract settled Wednesday at US$71.93, a decline of 95 cents.

Gasoline futures dropped 1.35 cents to US$2.1200 a gallon (3.8 liters) while heating oil prices fell 0.29 cent to US$2.0200 a gallon.

The U.S. Energy Department said gasoline demand was up 0.3 percent over the past four weeks compared with the same period in 2005. But at this time last year, demand for the four-week period had risen 1.5 percent compared with the same period in 2004.

The average retail price of gasoline in the U.S. is now US$2.91 a gallon, or 68 cents higher than a year ago.

Despite the recent declines, oil prices remain about a third higher than a year ago because of supply disruptions, geopolitical tensions and the scant surplus production capacity available to the industry in the event of a major output hiccup. Analysts also said they expect global energy demand to remain strong.

Most prominent among supply disruptions, Nigeria is producing some 450,000 fewer barrels per day because of violence in the region. On the geopolitical side, the West's effort to contain Iran's nuclear ambitions is the top concern.

The Energy Department report showed that domestic crude oil inventories fell by 200,000 barrels last week to 345 million barrels, or 5.6 percent above year-ago levels. Gasoline inventories shrank by 1.9 million barrels to 200.6 million barrels, or 5.6 percent below year-ago levels. Supplies of distillate fuel, which include heating oil and diesel, increased by 1 million barrels to 115.6 million barrels, or 10.6 percent higher than last year, the agency said.

Refineries ran at 88.2 percent of their capacity, up 2 percent from a week ago, while crude-oil imports rose by 199,000 barrels a day to 9.86 million barrels a day.