Oil prices ease after hitting $112
Foreign Desk Report

LONDON—World oil prices slipped Thursday, one day after striking a record high above 112 dollars per barrel on the back of tumbling American energy reserves and the weak US currency, traders said. New York’s main oil contract, light sweet crude for delivery in May, drifted 28 cents lower to 110.59 dollars per barrel.
The contract had rocketed to an historic 112.21 dollars in intra-day trade on Wednesday. In London on Thursday, London’s Brent North Sea crude for May eased 19 cents to 108.28 dollars per barrel, after earlier striking a lifetime peak of 109.98. Crude futures were boosted Wednesday after the US Department of Energy (DoE) reported that American energy stockpiles fell across the board during the week ending April 4.
US crude reserves slumped by 3.2 million barrels and gasoline or petrol inventories shed 3.4 million barrels, the DoE said. Both falls were higher than market expectations. “The substantial inventory and crude oil draws and the weak dollar has pushed prices to a new high,” said Tony Nunan of Mitsubishi Corp’s international petroleum business in Tokyo. “It was a rather bullish inventories report.” Traders are focused on supplies of gasoline — refined from crude oil — ahead of the peak demand US driving season, starting in May, when many Americans hit the roads for their holidays. “Market participants are clearly paying more attention to the market fundamentals (of supply and demand) ahead of the summer driving season in the northern hemisphere,” said Sucden analyst Andrey Kryuchenkov. “The greenback was still weaker this morning, helping to support oil prices.” The weak US currency tends to encourage demand for dollar-priced crude because it becomes cheaper for foreign buyers. The euro hit record peaks against the dollar and sterling on Thursday, boosted by favourable interest rate differentials, analysts said.
In early morning deals, the euro soared as high as 1.5913 dollars, which beat the previous pinnacle of 1.5905 dollars that was set on March 17. Meanwhile OPEC, the cartel which pumps about 40 percent of global output, has reiterated its stance that the world is amply supplied with oil.
On Tuesday, OPEC President Chakib Khelil said there was no need to increase crude oil production and that “stocks are in pretty good shape.” The Organisation of the Petroleum Exporting Countries (OPEC) defiantly kept its daily output quota at 29.67 million barrels at its last meeting in March. Oil prices held steady around $111 a barrel on Thursday, within sight of the previous day’s record high after a sharp fall in U.S. crude and fuel stocks rekindled concerns about summertime supplies.
U.S. crude eased 9 cents to $110.78 a barrel by 0704 GMT, below its peak of $112.21 touched in the previous session. London Brent crude fell 11 cents to $108.36 a barrel, about $1 shy of its record.
Prices surged 2 percent on Wednesday after data showed U.S. crude oil inventories fell 3.2 million barrels last week as imports declined, countering earlier expectations for a build, while gasoline and distillate stocks also fell, data from the Energy Information Administration showed.
“The data fuelled concerns of tight oil market conditions, pushing prices higher,” said Commonwealth Bank of Australia’s commodity strategist David Moore, in a research note. U.S. gasoline and heating oil futures, as well as London gas oil, hit record highs.