Oil below $118 ahead of U.S. supply data

LONDON - Oil eased on Wednesday from a record high of nearly $120 a barrel in the previous session, as traders anticipated a rise in crude oil stocks in the world's top energy consumer the United States.

By (Reuters)

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Published: Wed 23 Apr 2008, 6:25 PM

Last updated: Sun 5 Apr 2015, 11:43 AM

U.S. crude for June was down 48 cents at $117.59 a barrel at 1055 GMT. The May contract expired on Tuesday at $119.37, after briefly hitting an all-time peak of $119.90.

London Brent crude was down 63 cents at $115.32, after touching a record high of $116.75 the previous session.

Latest weekly fuel inventory data from the U.S. Energy Information Administration due later on Wednesday is forecast to show a 1.2 million barrel rise in crude stocks last week, while gasoline stocks are expected to have fallen by 2.3 million barrels..

"We doubt this week's figures will do much to dent the recent advance," Edward Meir of broker MF Global said in a research note.

Oil has surged above $100 this year in response to booming demand from emerging markets such as China plus underinvestment in new oil supplies that have contributed to a fivefold increase in prices since 2002.

Hedge funds and other investors have poured money into oil, gold and other commodities because of turmoil in equity and bond markets related to the credit crisis.

Demand still high

The higher prices and even the threat of a U.S. recession have not put the brakes on oil's advance.

"We are seeing no evidence of demand destruction even as prices keep rising," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

"OPEC is still not willing to pump more oil onto the market, and to add to the situation, there is no significant production increase beyond OPEC," he added.

President George W. Bush on Tuesday said he was concerned about record high crude oil and gasoline prices.

But a meeting of major energy producers and consumers in Rome this week highlighted the fact that the world might have to live with high oil prices to ensure supplies for the future.

Long-dated oil prices are above $100 a barrel out to 2016, illustrating the long-term supply constraints.

Disruptions in Nigeria have intensified the market's bullish tone.

Pipeline attacks in OPEC member Nigeria last week shut 169,000 barrels per day (bpd) of Bonny Light production, forcing Royal Dutch Shell to declare force majeure on crude exports.

Nigerian rebels also attacked two Shell oil pipelines in the Niger Delta on Monday.

Britain's Grangemouth oil refinery is proceeding with a gradual shutdown ahead of a planned strike at the weekend. Management and union members are in talks to try to avert the strike which could disrupt fuel supplies in the UK.

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