Wednesday, April 7, 2010

Crude Oil Extends Decline After Inventories Increase More Than Predicted

Crude oil fell for the first time in seven days after a government report showed a bigger than forecast increase in U.S. inventories as imports surged. Supplies rose 1.98 million barrels to 356.2 million last week, the Energy Department said today. Stockpiles were forecast to climb by 1.35 million barrels, according to a Bloomberg News survey of analysts. Imports gained 5.5 percent to 9.56 million barrels a day, the most since September. Refineries operated at the highest rate since October.

“The fundamentals don’t support prices at these levels,” said Michael Fitzpatrick, vice president of energy at MF Global in New York. “Oil supplies increased even as refineries boosted operating rates, which shows there is no problem with supply.” Crude oil for May delivery fell 22 cents, or 0.3 percent, to $86.62 a barrel at 1:43 p.m. on the New York Mercantile Exchange. Prices reached $87.09 yesterday, the highest level since Oct. 9, 2008. Futures are up 9.1 percent this year.

Imports of crude oil increased by an average 501,000 barrels a day last week, the report showed. Fuel imports climbed 7.5 percent to 2.76 million barrels, the highest level since the week ended Feb. 5. “Imports were very strong at over 9.5 million barrels a day,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “That tells me that refiners are stocking up now because they are concerned that prices will rise further in the months ahead”....Read the entire article.

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