Oil prices retreat from record New York high

World oil prices fell on Thursday, 2 August, a day after New York hit a record high $78.77 a barrel on news of sliding American crude reserves and as traders looked to recovering US refinery output.

New York’s main futures contract, light sweet crude for delivery in September, fell 68 cents to $75.85 a barrel in electronic deals before the start of US floor trading.
The contract had surged to $78.77 on Wednesday after the US Department of Energy (DoE) said crude stockpiles sank 6.5 million barrels in the week ended 27 July.

That was almost six times more than market expectations for a fall of 1.13 million barrels, and sparked concern over tight global energy supplies, traders said.
In London on Thursday, the price of Brent North Sea crude for September delivery slid 65 cents to $74.70 a barrel in electronic trade.

“The overall decline can be mainly explained by the latest data showing an increase in refinery throughput levels in the US, which eased fears of insufficient product supplies,” said analysts at Vienna’s PVM Oil Associates.

The DoE had also revealed Wednesday that US refinery utilisation rates rose to 93.6 percent in the week to 27 July — their highest level in 11 months.

The increase in refinery rates was initially overlooked by investors, who saw the much larger than expected drop in crude reserves as heralding a new record in New York.
However, they soon switched focus to the rise in refining rates that resulted in an increase in both US gasoline (petrol) and distillates stockpiles.

Despite Thursday’s losses, prices remain underpinned by low US crude stocks, geopolitical tensions, risks to supply from the North Atlantic hurricane season and OPEC’s seeming reluctance to increase output, analysts said.

“Increasing (US) crude oil demand and decreasing imports outstripped the market consensus,” added Societe Generale analysts of the US stocks report.
The New York record also sparked another call from the International Energy Agency for oil producers’ grouping OPEC to increase its production.

OPEC members, who supply about 40 percent of the world’s crude, insist that recent gains in prices are not due to tight supply.

The Organisation of the Petroleum Exporting Countries has resisted previous IEA calls to pump more crude to keep oil prices down. The next OPEC meeting is scheduled for September 11 in Vienna.

This week’s all-time high in New York topped the previous record of $78.40 set on 13 July, 2006 amid violence between Israel and Lebanon.