US crude oil stand at US$47.80, the weakest level since mid-February, and Brent crude prices fell to US$47.81 a barrel. Oil prices dipped to a three-month low on news that US inventory levels have reached their highest levels for 6 years. This marks a fall of nearly 20% from the record-high of US$58.28 hit on April 4. US government data on Wednesday showed US oil inventories had risen to a 6 year high of 329.7 million barrels.
However, the current surplus of oil is offset by limited spare production capacity and long-term supply tightness. Spare production capacity has been all but eliminated as the Organisation of the Petroleum Exporting Countries is pumping flat out. The other factor is the rise of China as the world's second largest oil consumer after the United States. China's crude oil imports for April stood 23% higher than a year ago and had reached an all-time monthly high of 12.25 million tons.
The International Energy Agency in its monthly report published this week said incremental demand in China and also Europe and the United States was less than expected as weakening economic growth and inflated fuel costs slowed growth.
Will Opec, which next meets in Vienna in June, cut back supplies to prevent prices falling too far?
14-May-05 
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