VIENNA, Austria, AP- Oil prices slipped Thursday after U.S. government data showed a large increase in crude oil inventories, and an OPEC official said he expected prices to stabilize at between $50 and $60 per barrel.
Still, prices remained roughly 13 percent higher than a year ago, reflecting the strength of geopolitical tensions as worries about the stability of supplies from Iran and Nigeria are underpinning prices.
Light sweet crude for April delivery dropped 20 cents to $61.97 a barrel on the New York Mercantile Exchange by midday in Europe. The price had fallen 93 cents on Wednesday to settle at $62.17.
On London’s ICE Futures exchange, Brent crude was down 42 cents at $62.52.
Nymex gasoline futures fell nearly 3 cents to $1.8000 per gallon, while heating oil was steady at $1.7790 a gallon.
In Moscow, where energy ministers from the world’s most industrialized countries met Thursday to discuss global energy security, OPEC research division director Adnan Shihab-Eldin predicted that oil prices would stabilize at between $50 and $60 per barrel in the coming years.
“Clearly, there will no longer be the kind of growth we have seen recently,” he was quoted by Russian newswires as saying.
In its weekly supply report Wednesday, the U.S. Energy Department said crude oil inventories rose by 4.8 million barrels last week to 339.9 million barrels, or 10 percent above year-ago levels.
However, supplies of refined products fell. Gasoline inventories dropped by 900,000 barrels to 223.9 million barrels, or less than 1 percent above year-ago levels. Stocks of distillate fuel, which include diesel and heating oil, shrank by 3.9 million barrels to 127.5 million barrels, or 13 percent higher than a year ago.
Refiners are in the midst of the turnaround season when they shut down their plants to perform maintenance ahead of summer, which is traditionally the busiest period for gasoline production. It often causes supplies to tighten and prices to rise.
Vienna’s PVM Oil Associates said current crude stock levels — which are 17 percent above the five-year average — “could result in space problems as storage capacity is almost exhausted in some areas.”
Despite the drop in heating oil levels, “the cushion to the five-year average is still at a healthy 12 percent and with spring emerging, demand for heating fuels is likely to decline in the coming weeks,” PVM said.
As for gasoline, supplies remained 4 percent above the five-year average, although that could change soon with the planned shutdown of some refinery facilities at the St. Croix refinery in the Caribbean in about two weeks, PVM said.
The International Energy Agency, a watchdog for the world’s energy consumers, lowered its 2006 oil demand estimate this week by 290,000 barrels per day. The IEA attributed the lessened forecast demand to persistently high fuel prices and slowing consumption in Southeast Asia.