Brent futures dropped toward $102 this morning after an unexpected jump in oil inventories in the world’s largest consumer, the United States, while producer cartel OPEC and the US government both trimmed global demand forecasts.
A Bank of Japan decision not to follow up a $1.4-trillion stimulus program announced in April rekindled fears that other central banks, including the US Federal Reserve, could scale back stimulus efforts, and also hurt investor sentiment.
Brent crude futures fell 48 cents to $102.48 a barrel by 04.42 GMT, while US oil fell 78 cents to $94.60.
US oil stockpiles rose 9 million barrels last week, data from the American Petroleum Institute showed yesterday.
“US inventories are still relatively high, well above five-year averages anyway, for this time of year,” said Natalie Rampono, commodity strategist at ANZ in Melbourne.
US oil inventories would normally be expected to start dropping at this time of year, when the summer driving season causes fuel demand to spike.
Both the Organisation of the Petroleum Exporting Countries (OPEC) and the US Energy Information Administration (EIA) cut their demand forecasts yesterday.
“The fact that they are making ongoing downgrades, I think that’s also weighing on sentiment,” said Ms Rampono, adding that the cuts of 10,000 and 20,000 barrels per day were not much.
OPEC trimmed its forecast for 2013 world oil demand growth by 10,000 barrels per day (bpd) to 780,000 bpd.
But it expects demand to grow more quickly during the rest of the year than in the first half, boosted by economic recovery and higher seasonal consumption, the cartel said in a monthly report.
The EIA also cut both its 2013 and 2014 world oil demand growth forecasts by 20,000 barrels per day.
Oil demand in developing countries in April surpassed that of wealthy nations for the first time ever, the EIA reported.
Reuters
