Oil prices fall on inventory gains

13 May 2010

West Texas Intermediate contract trades at $74 a barrel

Oil prices fell below $80 a barrel in Europe during the week ended 13 May while values in the US remained rooted in the mid-$70s a barrel on the back of a glut of supply in the world’s biggest energy consumer.

Europe’s benchmark June Brent contract was trading at $80.93 a barrel, down from $82.70 seven days before but up from lows under $80 a barrel earlier in the week.

The US’ benchmark June West Texas Intermediate (WTI) contract was trading at $74 a barrel, down almost $6 from the $80 a barrel recorded a week earlier.

The average price for oil produced by the 12 member states of the oil cartel Opec was $77.53 a barrel on 12 May, higher than the closing price for WTI, an extremely rare occurrence.

Analysts attribute the weakness of prices in the US to an ongoing glut of supply. Crude oil stocks have been growing steadily in the world’s biggest energy consumer in recent months, the US’ Energy Information Administration reported on 12 May that inventories had grown another 1.92 million barrels to 362.5 million barrels.

Analysts at Barclays Capital, the investment arm of the UK bank, still forecast an average WTI price of $85 a barrel in 2010.

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