Crude-oil futures were off their highs in midday action Thursday, as traders mulled the Department of Energy's outlook for gasoline and oil prices and Saudi Arabia's offer to boost petroleum output.
On the New York Mercantile Exchange, crude for May delivery was last trading up five cents at $55.90 a barrel. May unleaded gasoline was down 1.6% at $1.632 a gallon.
May natural gas was down 2% at $7.41 per million British thermal units after the DoE reported a 10 billion cubic feet increase in natural gas in storage in the latest week. Analysts at Fimat were expecting a reduction in supplies.
Crude moved higher immediately after the DoE's statistical arm said it expects prices to remain above $50 a barrel through 2005 and 2006, buoyed by political unrest in countries with large oil reserves, little or no growth in supplies from major oil-producing countries and thinning levels of spare production capacity worldwide.
The Energy Information Administration said it expects the gasoline market to remain tight through the summer with prices averaging $2.28 a gallon, up 38 cents from the average price last summer. Monthly prices are expected to peak at about $2.35 a gallon, although they will be higher on the West Coast, the report said.
The EIA outlook overshadowed a report1 that Saudi Arabia, the world's largest oil exporter, has offered to pump oil at capacity, potentially adding 1.5 million barrels a day to global supplies.
John Kilduff, senior vice president of energy risk management at Fimat USA, said the market is struggling with confusing signals, including Wednesday's weekly oil supply data. The Saudi pledge to pump more oil "only ignites worries over capacity constraints and the additional barrels
are high in sulfur content anyway," he said.
In other commodity markets:
METALS: Gold prices couldn't sustain initial gains Thursday, but copper managed to extend the previous session's advance. Gold for June delivery eased 10 cents to trade at $429.10 an ounce, after moving above the $430 level to start. Meanwhile, May copper reached $1.5105 a pound, up 0.2 cent. Also on Nymex, May silver added a penny to $7.13 an ounce, while July platinum stood at $865 an ounce, up $1.90. June palladium slipped 80 cents to $200.80 an ounce.
--Mike Maynard