Oil Declines in New York After Saudi Arabia Says Market Is `Oversupplied'
Oil declined for the first time in four days in New York after Saudi Arabia, the world’s biggest exporter, said the global market has adequate crude supplies.
Futures slipped as much as 1.7 percent after Saudi Arabia’s Oil Minister Ali al-Naimi said yesterday the “market is oversupplied.” Crude fell 2.8 percent last week on speculation price gains spurred by conflicts in the Middle East will curb economic expansion. The world economy is being hurt by “very high” oil prices, said Nobuo Tanaka, the International Energy Agency’s executive director.
“The price recovery may have been delayed by al-Naimi’s comments, but I think the general trend is for the market to move higher,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “Investors are cautiously returning as it becomes apparent that Libyan crude may be unavailable for some time, and as unrest continues in other countries.”
Crude oil for May delivery slid as much as $1.88 to $107.78 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $108.12 at 1:57 p.m. London time. The more actively traded June future decreased $1.44, or 1.3 percent, to $108.78.
Brent crude oil for June settlement dropped $1.46, or 1.2 percent, to $121.99 a barrel on the London-based ICE Futures Europe exchange. Front-month Brent futures fell 2.5 percent last week to settle at $123.45. Brent’s premium over New York futures grew for the first time in three days, to $13.25 a barrel.
Saudi Arabia, the biggest oil exporter, has said it will make up for any crude production lost as a result of conflict in Libya, which erupted in mid-February. Saudi Arabia sold 2 million barrels of new blends of oil developed to help replace Libyan barrels withheld from the market, “and there is plenty left,” al-Naimi said as he arrived in Kuwait for a conference.
Unrest in Libya, Africa’s third-biggest producer, is the bloodiest in a wave of uprisings that has toppled leaders in Egypt and Tunisia and spread to Algeria, Bahrain, Iran, Oman, Syria and Yemen. Libya’s crude production, which averaged 1.6 million barrels a day last year, shrank to 390,000 barrels a day in March, according to a Bloomberg News survey of producers, analysts and companies.
Syrian President Bashar al-Assad told his newly appointed cabinet that plans to lift the country’s 48-year-old state of emergency must be completed next week while in Libya rebels said they expected to receive heavy weapons in their battle to overthrow Muammar Qaddafi.
Global crude supplies are shrinking while prices are rising because of many factors including “uncertainties,” the IEA’s Tanaka said in Kuwait yesterday.
Japan’s demand for crude oil will decrease as economic growth slows after the March 11 earthquake and tsunami, the nation’s Vice Minister of International Affairs Hideichi Okada said in Kuwait.
In Nigeria, Africa’s biggest crude producer, Goodluck Jonathan is close to re-election as president. Jonathan, who comes from the oil-rich, southern Niger Delta region, extended his lead in counting and is close to meeting the constitutional requirement to win a quarter of votes in two-thirds of states.
Jonathan had 19.2 million votes and 21 states compared with 9.1 million votes and eight states for his closest rival, Muhammadu Buhari, from the north, according to results released by the Independent National Electoral Commission. Jonathan’s ruling People’s Democratic Party won Abuja, the capital. Nuhu Ribadu of the Action Congress of Nigeria had 1.9 million votes and one state. Nigeria pumped 1.9 million barrels a day in March, according to Bloomberg estimates.
Hedge funds and other large speculators reduced their bullish bets on crude oil for the first time in four weeks amid signs the oil market had risen too fast.
Net-long positions in oil declined by 23,718 futures and options combined, or 7.8 percent, to 281,579, in the seven days ended April 12, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report.
To contact the editor responsible for this story: Stephen Voss on email@example.com