Crude Oil Extends Decline as U.S. Stockpiles May Have Gained

By Christian Schmollinger

April 14 (Bloomberg) -- Oil fell below $50 a barrel, extending yesterday’s 4.2 percent decline, on forecasts U.S. crude inventories gained last week because of plummeting fuel demand during the global recession.

An Energy Department report tomorrow may show oil supplies rose 2 million barrels last week, according to the median of responses in a Bloomberg News survey. Stockpiles are at the highest since July 1993 as refiners shut units for maintenance. Prices plunged yesterday after the International Energy Agency cut its 2009 demand prediction.

“The story for demand remains very weak,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “There is no evidence of a turnaround in the economic situation in the U.S.”

Crude oil for May delivery declined for a second day, dropping as much as 47 cents, or 0.9 percent, to $49.58 a barrel in electronic trading on the New York Mercantile Exchange. It was at $49.68 a barrel at 10:08 a.m. Singapore time.

Prices are up 11 percent so far this year after tumbling 54 percent in 2008. Oil fell $2.19 yesterday to settle at $50.05 a barrel, in the biggest drop on the Nymex since March 30.

Oil demand will shrink 2.8 percent this year as worldwide gross domestic product declines by 1.4 percent, according to the International Energy Agency, the adviser to 28 consuming countries. Consumption will decline 2.4 million barrels a day this year, about the same amount that Iraq produces, to 83.4 million barrels a day.

Gasoline Stockpiles

U.S. crude-oil supplies increased 1.65 million barrels to 361.1 million in the week ended April 3, the Energy Department said April 8.

Gasoline stockpiles probably dropped 750,000 barrels from 217.4 million a week earlier, according to the survey. Distillate fuels, a category that includes heating oil and diesel, probably fell 1 million barrels from 140.8 million.

Brent crude oil for May settlement was at $52.03 a barrel, down 11 cents, on London’s ICE Futures Europe exchange at 9:49 a.m. Singapore time. It fell $1.92, or 3.6 percent, to end yesterday’s session at $52.14 a barrel.

The May contract expires tomorrow. The more-active June contract was at $52.92 a barrel, down 11 cents, at 10:09 a.m. Singapore time.

Brent is trading at a more than $2-a-barrel premium to the West Texas Intermediate contract in New York, swinging from a discount of 43 cents on March 31.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net