The softening in prices was attributed primarily to the DoE data, which showed that total US oil stocks had risen by 8.7 million barrels over the week. The DoE also said that US oil demand so far this year was 2.1 per cent lower than in the corresponding period of 2001, although demand had improved over the past month, falling by just 0.2 per cent. The report did little to persuade dealers that the US economic recovery is strong enough to see a significant oil stock drawdown.

The latest US data, coupled with prices remaining in the middle of its target price band of $22-28 a barrel, makes a change in OPEC production quotas even more unlikely when ministers hold their regular meeting in June to review the markets. ‘OPEC needs growth in global oil demand to create a market for its oil but that growth is being choked off by the high oil price that OPEC itself is defending,’ the London-based Centre for Global Energy Studies said in its latest monthly report.

Whether non-OPEC producers will continue to rein in production looks more uncertain. On 21 May, Norway said it had still to decide whether or not to increase output from 1 July, adding that a decision would only be taken in mid June.