US oil prices lower, further declines expected

Brent crude continued its descent, falling by 18 cents per barrel to US$113.02 yesterday. But benchmark US oil rose slightly, adding 42 cents to US$97.23. Analysts say oil prices should keep falling this summer if supplies grow as expected. OPEC increased oil production by 320,000 barrels per day in April, according to Platts, the energy-information arm of McGraw-Hill Cos. OPEC’s biggest producer, Saudi Arabia, plans to crank up production even further in an effort to push oil prices lower. Declining oil prices could take some pressure off a world economy that’s struggling to grow. Already, the decline in US gasoline prices over the past month amounts to a savings of about US$2 to US$3 per fill-up. That’s enough to cut American gasoline spending by US$73.1 million per day.

Meanwhile, the price of natural gas increased by 3.6 cents to US$2.503 per 1,000 cubic feet, the highest since the end of February. Natural gas prices have rebounded from ten-year lows as the industry shuts down production operations across the country. US supplies still climbed last week, according to the government’s latest report. But the increase was smaller than analysts expected. “Producers are finally pulling back” on production, independent trader and analyst Stephen Schork said. “It’s making a difference.” In other futures trading, heating oil lost 1.14 cents to US$2.9877 per gallon and wholesale gasoline fell by nearly a penny to US$3.0169 per gallon.

(AP)