Oil prices slip below US$49 a barrel

03-May-05

Oil prices have dropped to levels last seen in February, falling to US$49 a barrel on Monday. This drop follows Friday slide, when oil prices closed below US$50 a barrel, a psychological threshold, after declining by more than US$5 a barrel over the previous week. This decline in prices can be attributed mainly to rising stocks coupled with growing OPEC production, indicating that prices could fall some more in the weeks to come. Inventory of crude oil in USA grew by 5.5 million barrels to 324.4 million barrels-9% above year-ago levels - the 10th time supplies have risen in 11 weeks. Light, sweet crude contract for June on the New York Mercantile Exchange fell to US$49.13 a barrel in Europe. Brent crude did not trade as International Petroleum Exchange was closed on account of a public holiday. While oil futures have fallen from their recent peak above $58 a barrel, prices remain more than 30 percent higher than a year ago. The U.S. Commerce Department's announcement that the U.S. economy grew at a slower-than-expected rate of 3.1% in the first quarter, easing concerns over booming crude oil demand.