BUSINESS

Oil slips on expectation U.S. supplies are growing and report on Saudis output

05/07/2013 02:37 EDT | Updated 07/07/2013 05:12 EDT
NEW YORK, N.Y. - The price of oil fell Tuesday on expectations of another increase in U.S. oil supplies.

West Texas Intermediate, the benchmark crude in the U.S., fell 54 cents to finish at US$95.62 per barrel on the New York Mercantile Exchange.

The U.S. Energy Department releases its weekly report on U.S. oil inventories Wednesday. Addison Armstrong, senior director of market research at Tradition Energy, expects supplies rose by 2.8 million barrels in the week ended May 3. Analysts surveyed by Platts expect an increase of 1.9 million barrels.

Oil production in the U.S. is the highest in two decades, while demand for gasoline and other fuels remains subdued.

Last week the Energy Department said supplies rose by 6.7 million barrels, contributing to a more than two per cent drop in the price of oil.

Meanwhile Saudi Arabia is apparently adding to ample global supplies. Reports say the Saudis continued to increase crude oil output in April, to around 9.3 million barrels a day. That weighed on oil prices Tuesday.

The added Saudi output "makes it more difficult to reduce the oversupply and allow the oil price to recover," said a report from Commerzbank in Frankfurt.

Brent crude, which is the benchmark for international oil varieties, fell $1.06 to end at $104.40 per barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

— Wholesale gasoline dropped three cents to finish at $2.83 a gallon.

— Heating oil rose one cent to end at $2.93 a gallon.

— Natural gas fell nine cents to finish at $3.92 per 1,000 cubic feet.

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Pablo Gorondi in Budapest and Pamela Sampson in Bangkok contributed to this report.

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