OIL prices finished slightly lower yesterday, as concerns about Europe's debt crisis and weaker global demand offset fresh signs of an improving US economy.
Benchmark crude fell 12 cents to end at US$100.59 per barrel in New York. It rose as high as US$102.06 per barrel earlier in the day. Brent crude fell 87 cents to finish at US$110.66 per barrel in London.
Two developments pointed to signs of slower growth in oil demand this year. The International Energy Agency issued a revised forecast predicting global demand for oil would increase by 1.1 million barrels a day, down from an earlier estimate of 1.3 million barrels a day.
In another sign of weaker demand for oil and gas, Hovensa LLC said yesterday that it will close a major refinery in the US Virgin Islands next month that is producing about 350,000 barrels per day. The company, a joint venture of Hess Corp. and Venezuela's state-owned oil company, has incurred losses of US$1.3 billion over the past three years and expected losses to continue in the slower global economy.
"Here's another instance where refiners are facing such poor margins they're closing units down and that suggests that demand in the coming months for crude oil to be refined is going to be dropping off," said Tradition Energy analyst Gene McGillian.
Also yesterday there was encouraging news about the US economy to offset the gloomier international picture. The Federal Reserve reported that US manufacturing activity increased in December by the biggest amount in a year. And another report from a private group said that new orders rose and production increased last month.
Oil prices have hovered between US$98 per barrel and US$103 per barrel this month as investors look for more signs of where the global economy may be headed. Europe's sovereign debt crisis has been in the spotlight because a slowdown there could mean a significant drop in demand for oil in the months ahead. The International Monetary Fund said yesterday that it wants to increase its financial resources by about US$500 billion to help ease the crisis.
In other energy trading in New York, heating oil fell 2 cents to end at US$3.01 per gallon, gasoline futures rose 5 cents to finish at US$2.83 per gallon and natural gas fell 2 cents to end at US$2.47 per 1,000 cubic feet.
Source:shanghaidaily