Crude prices fall below US$59

24-Jun-05

On Tuesday, July crude futures expired at about US$58.90 - much below the US$60 mark and further dropped by almost US$1 a barrel on Wednesday. Though data released by the U.S. government showed a drop in crude inventories by about 1.6 million barrels to about 327.4 million barrels last week, gasoline and distillate fuel saw a build in inventories by 4.5% and 1% respectively. Light sweet crude for August settled at about US$58.09 on the New York Mercantile Exchange, while Brent crude fell at about US$56.58 on the International Petroleum Exchange. Crude futures, currently 50% higher than a year ago, may have to surpass US$90 to reach the all-time inflated adjusted record set in 1980. However, worries of tightness in the near future have resulted in keeping the contracts from November upwards, almost above the US$60-per-barrel threshold. Negotiations in Norway have been considered successful in averting an offshore platform strike that could have cut Norwegian oil production by almost one million barrels a day. This is almost a third of the country's daily production. However, while this strike was being avoided the markets were speculating a possible unrest in Nigeria that would have derailed exports from one of Africa's largest producer.