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Monday May 23, 10:40
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Oil prices down on rising US inventories and French refineries resuming production
(by Julia Jenson)
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Crude futures edged down Monday on rise in US stockpiles, OPEC statements and resumption of production at French refineries.
Jule oil futures declined $0.35 to $48.30 a barrel.
The U.S. Department of Energy released a report that showed an increase in inventories of crude oil to 334 million barrels in the past week, up 34 million barrels from year-ago levels. This is the thirteenth increase in fourteen weeks.
All five of the French refineries operated by Total SA today resumed production that was halted due to a strike last week which resolved some of the concerns about gasoline supply. The strike that lasted five days was taking place in the plants that account for the production of 932,000 barrels a day.
``With production from Total’s refineries coming back quickly, the strike shouldn’t affect supplies of refined products very much,’’ said Sam Tilley, an analyst with Sucden U.K. Ltd., a London futures broker. ``OPEC is talking about keeping production high. There’s so much oil out there that prices could go down to $45 by mid-June and bottom at $40.’’
Sheik Ahmed Fahd Al Ahmed Al Sabah, head of OPEC and Kuwait’s oil minister, said on Al Arabiya TV in Dubai on Sunday that oil-producing nations favored a price range between US$30 and US$50 that was acceptable both to consumers and producers. However, analysts note that despite bearish comments aimed to reduce the markets’ anxiety, oil may soon resume the upward trend. This may happen because around $48 the oil price is already under the upper limit of the rather loose range set by the cartel. Previously, oil prices were known to shoot above $58 in the time when OPEC set the range between $40 and $50 a barrel.
Besides, it remains a fact that OPEC is pumping close to full tilt and does not have much spare capacity left. The worries persist about the possibility of a supply crunch later in the year.
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