High Increase in Crude Supplies Maintains Oil Prices at $103

Recent oil prices remained below $103 per barrel following a sharp drop during the past days when figures indicated that crude supplies in the United States increased to higher than expected levels for the fourth week. The increase in supplies is a sign that demand stays weak.

In Europe, Benchmark oil prices for May delivery was higher by 28 cents to reach $102.95 per barrel during midday trading in NYMEX. In New York, the contract dropped by $1.53 to finish at $102.67 a day before. In London, Brent crude for delivery in June was higher by 76 cents to finish at $118.73 a barrel.

According to a recent statement of the Energy Information Administration, crude oil stocks in the United States rose by 3.9 million barrels in the past week. Analysts anticipated a growth of 400,000 barrels. Moreover, the weekly report of the government showed that gasoline demand in the United States dropped by 2.8% compared to last year.

Current crude oil prices have been in the $100 per barrel mark for the most part this whole year. This led U.S. gasoline prices close to $4 per gallon – which is around $1 per liter. If fuel prices increase further, it could risk the consumer sector and the fragile growth of the country’s economy, according to Fitch Ratings.

Gasoline prices are a main indication of the discretionary income of consumers in the United States, and spending is projected to push 70% of the country’s economy, said Fitch in a report. Because of this, short-term interruption in oil prices can significantly disrupt the recovery of the U.S. economy.

Elsewhere in the energy markets, prices of heating oil increased by 1.7 cents to reach $3.13 a gallon. Gasoline futures is at $3.22 a gallon which is a gain of 1.4 cents. Natural gas stayed at $1.95 for every 1,000 cubic feet.

By: Chris Termeer