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NEW YORK -- Crude oil and gasoline plunged to a one-month low on signs that record fuel prices are slowing growth in global energy demand, Bloomberg.com reported.
"Signs of weaker demand are hanging over the market," said Tom Bentz, an oil broker at BNP Paribas Commodity Futures Inc. based in New York. "There has been a tremendous rise in prices over the past year, which has had an effect."
OPEC reduced its forecast for oil demand for a fifth straight month reported Bloomberg.com. The U.S. Energy Department and International Energy Agency have also cut their demand estimates this month. IEA said it wouldn't release more stockpiles to fill gaps caused by Hurricane Katrina after an auction of U.S. oil reserves met weak demand.
Demand for gasoline declined 4.3 percent to 8.6 million barrels a day last week, the U.S. Energy Department said Sept. 14. The fall coincided with the Labor Day holiday when vacationers usually take to the road. Gasoline consumption peaks during the driving season, which runs from Memorial Day to Labor Day.
"Gasoline demand has fallen with the end of the driving season," Jeff Lenard, spokesman for the National Association of Convenience Stores, said in a Bloomberg.com report. "We're also hearing there is a reduction of demand beyond what we normally see in September."
Regular-grade gasoline, averaged nationwide, fell 2.8 cents to $2.887 a gallon last Thursday, according to data released by the AAA. Prices have declined 5.6 percent since touching a record $3.057 on Sept. 2. Pump prices are 57 percent higher than a year ago.
Bloomberg.com stated that the Energy Department sold 11 million barrels of crude oil from the Strategic Petroleum Reserve out of the 30 million barrels offered on Sept. 14. The other 25 members of the IEA agreed to make an additional 30 million barrels of crude oil and petroleum products available.
"The crude market isn't tight at all," said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Mass. "OPEC and non-OPEC production is rising and anyone can buy additional oil from the SPR."
U.S. crude-oil inventories fell 6.6 million barrels in the week ended Sept. 9, according to the department. The decline left stockpiles 20.2 million barrels, or 7 percent, higher than the five-year average for the date, the department said.
"Growth is down from last year," Emerson said in Bloomberg.com. "The United States and China led demand growth last year but that's changing. The situation in China has changed; they are not using as much distillate fuel for power generation."