Oil drops below $50

Oil drops below $50
# 14 April 2009 08:42 (UTC +04:00)
Baku. Vahab Rzayev – APA-Economics. Oil fell below $50 a barrel, extending yesterday’s 4.2 percent decline, on forecasts U.S. crude inventories gained last week because of plummeting fuel demand during the global recession, Bloomberg reports.

An Energy Department report tomorrow may show oil supplies rose 2 million barrels last week, according to the median of responses in a Bloomberg News survey. Stockpiles are at the highest since July 1993 as refiners shut units for maintenance. Prices plunged yesterday after the International Energy Agency cut its 2009 demand prediction.

Crude oil for May delivery fell as much as 85 cents, or 1.7 percent, to $49.20 a barrel in electronic trading on the New York Mercantile Exchange. It was at $49.35 a barrel at 1:10 p.m. Singapore time.

Prices are up 11 percent so far this year after tumbling 54 percent in 2008. Oil fell $2.19 yesterday to settle at $50.05 a barrel, in the biggest drop on the Nymex since March 30.

Oil demand will shrink 2.8 percent this year as worldwide gross domestic product declines by 1.4 percent, according to the International Energy Agency, the adviser to 28 consuming countries. Consumption will decline 2.4 million barrels a day this year, about the same amount that Iraq produces, to 83.4 million barrels a day.

.S. crude-oil supplies increased 1.65 million barrels to 361.1 million in the week ended April 3, the Energy Department said April 8.

Gasoline stockpiles probably dropped 750,000 barrels from 217.4 million a week earlier, according to the survey. Distillate fuels, a category that includes heating oil and diesel, probably fell 1 million barrels from 140.8 million.

Brent crude oil for May settlement fell as much as 63 cents, or 1.2 percent, to $51.51 a barrel on London’s ICE Futures Europe exchange. It was at $51.68 a barrel at 1:12 p.m. Singapore time.

The May contract expires tomorrow. The more-active June contract was at $52.58 a barrel, down 45 cents.

Brent is trading at a more than $2-a-barrel premium to the West Texas Intermediate contract in New York, swinging from a discount of 43 cents on March 31.