Oil falls on high US in­ven­tory; un­rest sup­ports Brent

Obama says US to re­duce oil im­ports by 1/3 in 10 years

The Financial Daily - - MARKET SUMMARY -

LON­DON: Oil fell on Wed­nes­day, weighed down by swelling crude in­ven­to­ries in the United States, while Pres­i­dent Barack Obama was ex­pected to set an am­bi­tious long-term goal to cut oil im­ports.

Crude oil stocks at Cush­ing in Ok­la­homa, the de­liv­ery point of US crude, rose to a record high, drag­ging US fu­tures prices lower by more than $1 at one point.

By 1501 GMT, US crude slipped by 71 cents to $104.08 a bar­rel while North Sea Brent crude fell 9 cents to $115.07 a bar­rel.

Do­mes­tic crude stocks rose 2.95 mil­lion bar­rels in the week to March 25, the re­port showed, well above ex­pec­ta­tions for a 1.8 mil­lion bar­rel build.

Crude oil stored at the NYMEX Cush­ing, Ok­la­homa, de­liv­ery hub rose 1.69 mil­lion bar­rel to record high of 41.89 mil­lion bar­rels.

Gaso­line in­ven­to­ries

fell more than ex­pected, but an­a­lysts at­trib­uted a part of the fall to ex­ports.

Ahead of the weekly oil data, US crude nearly pared losses and Brent turned pos­i­tive as US ADP em­ploy­ment data showed the pri­vate sec­tor added 201,000 jobs in March.

While the high stocks at land-locked Cush­ing pro­vided some buf­fer to US crude from in­ter­na­tional geo-po­lit­i­cal risks the civil un­rest in North Africa and the Mid­dle East lim­ited losses in Brent crude prices.

In Libya, rebels pulled out of the oil town of Ras Lanuf on Wed­nes­day un­der heavy bom­bard­ment from Muam­mar Gaddafi's forces, show­ing their weak­ness with­out West­ern air strikes to tip the scales in their favour. A con­fer­ence of 40 gov­ern­ments and in­ter­na­tional bod­ies on Tues­day agreed to press on with a NATO-led aerial bom­bard­ment of Libyan forces un­til Gaddafi com­plies with a UN res­o­lu­tion to end vi­o­lence against civil­ians.

In the long term, US Pres­i­dent Obama will out­line a strat­egy to cut oil im­ports by a third over 10 years, fo­cus­ing on en­ergy se­cu­rity at a time high gaso­line prices could stall US eco­nomic re­cov­ery.

The White House says this is a de­lib­er­ate turn to­ward en­ergy se­cu­rity by Obama and will be fol­lowed by other events to high­light his strat­egy. But the im­me­di­ate mar­ket re­ac­tion was lim­ited.

"It sounds like a very am­bi­tious tar­get in­deed," said Carsten Fritsch, an­a­lyst at Com­merzbank.

"It will be dif­fi­cult to achieve. Per­haps there will be large en­ergy, fuel sav­ing mea­sures or they would need to al­low more oil drilling, but af­ter the Gulf of Mex­ico (spill) it could be dif­fi­cult." -Reuters

NEW YORK: Traders of crude oil and nat­u­ral gas re­act dur­ing early trad­ing at the New York

Mer­can­tile Ex­change. -Agen­cies

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