Commodity Daily News

Crude Oil Fails to Break $50

Crude Oil prices fell below $49 a barrel on speculation that a government report will show U.S. inventories rose from the highest level in more than 15 years. Crude earlier rose Tuesday, extending its monthly gains to nearly 11% as rising stock markets helped boost investment sentiment while a weakening greenback increased Dollar-denominated commodity prices. The Energy Department is scheduled to release its weekly supply update at 14:30 GMT. The report is forecast to show that inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, dropped. Oil prices rose $1.25, or 2.6%, yesterday to $49.66 a barrel as equities increased and a weaker Dollar enhanced the appeal of commodities.

The Organization of Petroleum Exporting Countries (OPEC) and the U.S. Energy Department cut their 2009 forecast for oil demand this month. They expect consumption to slump by more than 1 million barrels a day this year. Crude Oil supplies have increased as OPEC agreed on March 15th to keep output quotas unchanged, saying members have to cut a further 800,000 barrels a day to comply with existing targets. OPEC is next scheduled to meet on May 28th in Vienna.