VIENNA, Austria, AP – Oil prices extended their recent losses Thursday in a selloff triggered by rising gasoline supplies in the U.S. and signs that high oil prices have weakened demand.
Light, sweet crude for June delivery on the New York Mercantile Exchange slipped 16 cents to $68.53 a barrel in electronic trading by afternoon in Europe. Brent crude for July delivery on the ICE Futures exchange lost 21 cents to $68.83 a barrel.
Gasoline and heating oil futures were steady at $1.9706 and $1.9210 a gallon, respectively. Natural gas futures fell more than 5 cents to $6.075 per 1,000 cubic feet.
U.S. government data released Wednesday showed the domestic supply of gasoline rose for the third straight week amid stagnating demand.
The Department of Energy said in its weekly petroleum supply snapshot that domestic gasoline supplies grew by 1.3 million barrels last week to 206.4 million barrels. While that is 3.5 percent below year-ago levels, it comes at a time when gasoline consumption appears to be flattening out as a result of high prices.
The department said U.S. gasoline demand over the past four weeks was 9.2 million barrels per day, or about even with the same period last year.
Energy analyst Victor Shum of Purvin & Gertz in Singapore said it remained too early to tell if demand had indeed been significantly hurt by high oil prices, which are still about 40 percent higher than a year ago.
“We can’t tell what the actual gasoline demand situation in the U.S. is like until the summer driving season kicks in,” Shum said. The peak demand season usually begins with the Memorial Day holiday, which this year falls on May 29.
Vienna’s PVM Oil Associates cited forecasts by the American Automobile Association as apparently supporting “those arguing for the negative influence of high prices on demand,” noting: “The AAA forecasts only a marginal increase of people traveling during the upcoming Memorial Day weekend.”
Other data showed crude oil inventories slipping by 100,000 barrels last week to 346.9 million barrels, or 4.7 percent higher than last year, and distillate fuel stocks also falling by 100,000 barrels to 114.6 million barrels, or 7 percent higher than last year.
Lending to the weakness in oil prices was a report from the Organization of Petroleum Exporting Countries that slightly reduced its demand forecast for 2006 and predicted that the world’s crude-oil supply cushion would rise significantly by the end of the year.
But analysts say the market’s decline is unlikely to be sustained over the long-term, amid persistent anxieties about the West’s nuclear standoff with Iran, the threat of further supply disruptions in Nigeria and the upcoming Gulf of Mexico hurricane season.
“In the very near term prices may head lower on the U.S. inventory report, but there remain many issues and potential problems ahead, and because of that you can count on traders and financial investors to come back into the market,” Shum said.