Light sweet crude prices dropped on the final day of the June contract as OPEC leaders continue to reassure markets oil production will remain at its current 30.5 million barrel a day levels.
The price for crude in New York settled in at $46.92 today dropping 12 cents for the day. Brent crude in London went up 15 cents, coming in at 48.03. Gas prices hang around the $1.43 mark.
U.S. inventories grew 4.3 million barrels to 334 million and gasoline stocks rose 1.1 million barrels to 214 million. Many experts feel the market is well supplied as OPEC pumps at its highest levels in over two decades. OPEC has the pumps wide open at 30.5 million barrels a day and state emphatically that they can pump a lot more.
OPEC President Sheikh Ahmad al-Fahd al-Sabah said on Friday that demand growth forecasts determined OPEC would not need to cut back output during its meeting next month.
“Until now we see no reason to cut,” he said. “There is no need to trim, we will continue at this level.”
One of the reasons for the high levels of output is distillate shortage. Right now, diesel fuels and heating oil remain higher than normal for this time of year. One big reason is lower inventories and another is a French refinery problem. Union workers in some of France’s refineries decided to work after losing a public holiday. This combined with the shortages creates real anxiety in the market about the state of things , particularly in the fourth quarter.
The problem the U.S. comes from bottlenecked refineries. A number of U.S. refineries have had problems this past year and continue to do so. Despite all these complications, the oil referies are running at a little over 90% capacity.
John Stith is a staff writer for Murdok covering technology and business.
