NEW YORK – The price of oil fell for the ninth straight day Wednesday as global supplies continue to flow despite unrest in the world’s most important oil-producing region.
In the Middle East, the insurgency in Iraq is far from resolved, but hasn’t halted oil exports and the fighting now seems unlikely to spread to Iraq’s major oilfields. Meanwhile, tensions between Israel and Hamas have escalated in the past week, but aren’t threatening any major oil production.
On the supply side, Libyan crude exports appear poised to surge after an agreement between the government and local militias cleared the way for export terminals to open. And U.S. production continues to soar.
At the same time, refiners have already made much of the gasoline needed to fuel road trips for summer vacationers, so crude demand will begin to ebb over the next couple of months even as the U.S. oil supply of 382.6 million barrels as of July 4 was up 2.3 per cent from this time a year ago.
“We in the U.S., are sitting on a ton of crude oil,” says energy analyst Stephen Schork of the Schork Group. “We’re at the point in the season we have a lot of supply and demand is about to fall.”
U.S. benchmark crude fell $1.11 Wednesday to close at US$102.29 a barrel on the New York Mercantile Exchange. That’s slightly lower than the price on June 6, before insurgents seized the Iraqi city of Mosul, and five per cent below the 10-month high of US$107.26 reached June 20 at the height of most recent concerns over the insurgency. Schork expects to see oil fall further, to under US$100 a barrel, in the coming weeks.
Brent crude, a benchmark for international oils used by many U.S. refineries, lost 59 cents to US$108.47 in London.
On Wednesday, the Energy Department reported that U.S. crude oil supplies fell by 2.4 million barrels last week as refiners ramped up production, but it was less than the three-million-barrel decline that analysts had expected. Supplies are above the upper limit of their average for this time of year. Gasoline supplies rose and demand for gasoline fell slightly compared with the same period last year.
A day earlier, the Energy Department increased its estimate for U.S. crude production for this year and next year, with the U.S. now expected to produce 9.3 million barrels of oil per day in 2015.
In other energy futures trading on Nymex, wholesale gasoline fell 3.5 cents to close at US$2.938 a U.S. gallon (3.79 litres), heating oil fell 0.3 of a cent to US$2.871 a gallon and natural gas fell 3.4 cents to close at $4.17 per 1,000 cubic feet.