MW: Oil futures extend losses on fear of weak demand
By Polya Lesova & Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Oil futures sank below $75 a barrel on Friday, tallying a more than 4% loss for the week, as concerns over weaker energy demand persisted, fueled by weekly data from the Energy Department and concerns China might slow its growth.
Friday's weak opening on Wall Street after Thursday's sell-of, also affected sentiment. The Dow Jones Industrial Average (INDU 10,370, -19.57, -0.19%) recently fell 84 points after sinking more than 200 points in the previous session, hit by worries about President Obama's plan to regulate banks and China's move to restrict lending.
These "caused jitters across the markets, leading to a reduction in speculative positions [in crude oil] after sharp equity markets losses," Action Economics said in a note.
Crude oil for March delivery dropped $1.19, or 1.6%, $74.90 a barrel in electronic trading on Globex. Earlier, the contract hit an intraday low of $74.52 a barrel.
Oil prices sank 2% on Thursday.
"There remains ample supply of crude oil and oil products on the U.S. market," analysts at Commerzbank AG wrote in a note to clients. "A particularly bearish indicator is the low demand from U.S. refineries, which is reflected in a capacity utilization decline by 3 percentage points."
Excluding hurricane-related distortions, refinery demand is at the lowest level since recording started in 1989, the analysts said.
Refineries operated at 78.4% of capacity last week, down from 81.3%, the Energy Information Administration reported Thursday.
While crude inventories fell by 471,000 barrels and distillate supplies dropped by 3.3 million barrels, the EIA reported that motor gasoline inventories increased by 3.9 million barrels last week.
The buildup in gasoline supplies was bigger than the 2.1 million barrels expected by analysts polled by Platts.
"The latest U.S. inventory data had the hallmarks of an industry continuing to grapple with lackluster product demand," said analysts at Vienna-based JBC Energy.
U.S. crude-oil imports, for example, averaged 8.5 million barrels per day in the past week, down 355,000 barrels per day from the previous week.
Also on Globex, reformulated gasoline for February delivery fell 2 cents to $1.97 a gallon and heating oil for February delivery dropped 3 cents to $1.96 a gallon.
February natural-gas futures rose 16 cents, or 2.8%, to $5.77 per million British thermal units.
