High Crude Inventories and Slow Growth in Demand cause Oil prices to fall

13-May-05

Although inventories rose by a surprising 2.7 million barrels and were 30.3 million barrels higher than the levels of the past year, high fuel prices are slowing oil demand growth in key markets such as China, Europe and the US. Oil prices have slid below US$50 a barrel due to persistently high crude inventories in the United States and slow growth in the global demand for oil. US crude oil fell to US$50.10 a barrel after diving to a low of US$49.85. These prices are about 14% below the record-high of US$58.28 struck in early April. London's Brent crude oil stood at US$49.61 a barrel. China's demand growth slackened to 4.5% in the first quarter this year from 19.3% a year ago. Infact, China's annual demand growth projection has been trimmed by 30,000 bpd to 470,000 bpd. This has put downward pressure on prices, particularly as Chinese demand is the prime driver of global rise in oil consumption over the past year or so