OIL PRICES FALL
Oil prices fell modestly on the New York market Mar. 5, which analysts attributed to concerns about an unexpected increase in US gasoline supplies along with a strengthening dollar.
The US Energy Information Administration estimated gasoline supplies rose to 240.1 million as of Feb. 27. The agency's weekly petroleum status report called that the highest US gasoline inventory for this time of year since 1990.
Internationally, European Central Bank Pres. Mario Draghi announced the bank will start buying government bonds Mar. 9 to spur economic growth. Consequently, the dollar strengthened against other currencies. Oil is traded in dollars, and a stronger dollar makes oil more expensive to buyers using foreign currencies.
Separately, the Chinese government forecast economic growth of about 7% for 2015 compared with 7.4% experienced during 2014. Beijing officials also outlined energy-related goals, including reducing energy intensity—the amount of energy needed to increase gross domestic product—by 3.1% for 2015.
Earlier in the week, Saudi Arabia's Oil Minister Ali al-Naimi commented on oil policy.
"Today, it is not the role of Saudi Arabia or certain other OPEC nations to subsidize higher-cost producers by ceding market share," al-Naimi said Mar. 4 about the Organization of Petroleum Exporting Countries. He noted Saudi Arabia has low production costs.
"It is an advantage which we will use, as any producer would, to help supply dependent global customers," al-Naimi said during a speech in Berlin. "OPEC and Saudi Arabia have yet again been maliciously, and unfairly, criticized for what is, in reality, a market reaction."
Al-Naimi said price swings often trigger a "frenzy of commentary ascribing various bizarre theories and motives" to OPEC.
His comment may have come in response to Richard Fisher, president and chief executive officer of the Federal Reserve Bank of Dallas, who has suggested the Saudis "engineered" the oil price drop to counter surging US unconventional oil production.
The New York Mercantile Exchange April crude oil contract was down 77¢ to $50.76/bbl Mar. 5, and the May contract decreased 68¢ to $52.55/bbl.
The natural gas contract for April rose 7.2¢ to a rounded $2.84/MMbtu. The Henry Hub, La., gas price was $3.27/MMbtu, up 1¢.
Heating oil for April dropped 2.4¢ to a rounded $1.88/gal. Reformulated gasoline stock for oxygenate blending for April delivery was down 3.8¢ to a rounded $1.89/gal.
The April ICE contract for Brent crude oil declined 7¢, settling at $60.48/bbl, and the May contract dropped 25¢ to $60.96/bbl. The ICE gas oil contract for March climbed $3.75 to $581/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 benchmark crudes on Mar. 5 was $55.77/bbl, down 4¢.
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