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Oil falls after $4 surge on
profit taking, demand concerns, firmer dollar
Thomson
Financial
Thursday, April 3, 2008
Oil fell having jumped by over $4 yesterday on profit
taking and amid some concern about demand weakness but tight U.S.
gasoline stocks, which had helped prices surge yesterday, limited
losses.
New York's main WTI benchmark jumped yesterday after the United
States reported its gasoline stocks fell by more than the market
had expected. Crude stocks, meanwhile, rose above expectations
but this was not enough to stop prices surging.
'The stats out in the U.S. revealed a crude build of 7.4 million
barrels, significantly above the forecast levels which would have
been bullish for oil were it not for the gasoline stock number
which came in at over double the forecast,' said Bank of Ireland
analyst Paul Harris. 'The 4.5 million barrel decline in gasoline
is important coming as it does ahead of the driving season in
the U.S., the peak demand period.'
(Article continues below)
Uncertainty over the global demand outlook has also weighed on
prices this morning, however, after United States Federal Reserve
Chairman Ben Bernanke said yesterday that the world's biggest
economy may slip into a recession, the first time that he acknowledged
that possibility.
'Despite yesterday's run higher, we think it is unlikely that
we will be revisiting the recent highs anytime soon. Gasoline
alone is not capable of sustaining the advance, as the complex
is facing twin prospects of relatively high stocks and anaemic
demand,' said MF Global (NYSE:MF) analyst Edward Meir. 'We cannot
fathom how commodities can push to new highs just as the odds
of a potentially worldwide recession intensifies.
'The macro backdrop, which has looked weak in the U.S. for some
time now, is starting to impact worldwide growth prospects at
a faster rate,' he added.
Elsewhere in the commodity sector, most base metals were also
lower. A firmer dollar coupled with demand concerns have limited
the appeal of dollar-priced commodities.
At 10:05 a.m., New York's West Texas Intermediate crude for May
delivery was down $1 at $103.83 a barrel.
Full
article here.
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