Crude Oil Future on a Continued Downslide for 6th Week in a Row

April 15, 2005
(CoolAvenues News Wire)

Crude oil futures continued their downward slide to hit the lowest point in last two months after a positive data on US crude oil inventory build-up and on possibility of slowdown in energy consumption.

On NYMEX, light, sweet oil futured for May delivery was last traded at USD 50.22 per barrel, a drop of 1.64 dollars. The prices have fallen almost 12% of the record high of USD 58 per barrel, when oil prices rocketed to touch the all-time high after a GoldMan Sachs study predicted oil prices to touch as high as USD 105 per barrel.

As per majority of analysts, oil prices are expected to remain high in view of high growth in world economy, and so far high oil prices have not been able to create any significant impact on any nations' economy. However, France witnessed a drastic fall in industrial output in Feb '05 due to rising oil prices, and hence, impact of higher prices in slowing down the world economy can not be ruled out.

Hence, in order to put a check on rising oil prices, OPEC increased oil production by 500,000 BPD in March '05 to soften rising oil prices and promised to increase it by a further increase of 500,000 BPD if oil prices continued to remain high.

Now with IRAQ a little stable after the takeover by new regime, and continued high US inventory of crude oil, the prices are expected to remain low though traders are not willing to commit if crude is now off the peak. There is a further pressure on crude oil prices with IEA (International Energy Agency), on Tuesday, predicting a slow-down in oil demand growth.

However, as per most analysts, the demand-supply ratio in crude oil is still very tight and any supply shock can create considerable pressure on oil prices and may spike another season of high oil prices.

Concluded.

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