Oil below $102 after US output hits 28-year high

AP News
Posted: May 15, 2014 6:43 AM

The price of oil fell below $102 a barrel Thursday after official figures showed U.S. crude production at a 28-year high and stockpiles rising again.

By early afternoon in Europe, benchmark U.S. crude for June delivery was down 43 cents at $101.94 a barrel on the New York Mercantile Exchange. On Wednesday, the Nymex contract rose 67 cents to close at $102.37.

Brent crude, a benchmark for international oil grades, was down 15 cents to $109.16 a barrel on the ICE Futures exchange in London.

The declines came in the wake of figures from the U.S. Energy Information Administration showing that domestic crude production reached 8.428 million barrels during the week ended May 9. That was the highest level since October 1986. At the same time, crude stockpiles rose by 900,000 barrels last week, while analysts had been expecting a drop.

A stronger dollar also weighed on prices, making crude priced in dollars more expensive — and a less attractive investment — for traders using other currencies.

Meanwhile, the International Energy Agency raised its forecast for 2014 global crude demand to 92.8 million barrels a day, 65,000 barrels a day more than its previous forecast a month ago.

Global supplies rose by 700,000 barrels in April over March, to 92.1 million barrels a day, with over half the increase coming from OPEC members like Iraq and Saudi Arabia, the Paris-based IEA said.

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"Yet crude prices remain elevated and forecast balances call for a significant rise in OPEC production from current levels for the second half of the year," the IEA said in its monthly Oil Market Report. "While OPEC has more than enough capacity to deliver, it remains to be seen whether it will manage to overcome the above-ground hurdles that have plagued some of its member countries lately."

In other energy futures trading in New York:

— Wholesale gasoline fell 0.46 cent to $2.9463 a gallon.

— Natural gas dropped 1.8 cents to $4.349 per 1,000 cubic feet.

— Heating oil shed 0.18 cent to $2.9644 a gallon.