NEW YORK (AP) — The price of oil fell back to below $105 a barrel Thursday, ending a surge that had pushed the price to a 16-month high, after a report from the International Energy Agency said oil supplies would exceed the expected rise in demand next year.
U.S. benchmark crude fell $1.85 to $104.67 a barrel in midday trading in New York. Brent crude, which is used to price imported crude used by many U.S. refineries, fell 92 cents to $106.75 in London.
Oil has shot higher in recent days on a dramatic drop in supplies of oil and gasoline in the U.S., suggesting demand for the world’s biggest consumer of oil may be rising. Crude rose as high as $107.45 early Thursday — the highest since March of last year — before falling back in later trading.
But analysts noted even as prices were rising that global supplies remain ample and world demand, while growing, was moderate.
“The (U.S. crude) market has become overcooked,” wrote energy analyst Jim Ritterbusch of Ritterbusch & Associates in a report Thursday.
Oil extended its recent rise Wednesday after the Energy Department said U.S. crude supplies fell by 9.9 million barrels in the week ended July 5. Gasoline supplies fell by 2.6 million barrels. In the past two weeks, oil supplies have dropped 20.2 million barrels, which is slightly more than one day’s consumption for the U.S., while gasoline supplies have fallen 4.3 million barrels.
The supply drop, along with continued concerns that political upheaval in the Middle East could disrupt oil deliveries, had sent the price of oil up by $11 per barrel in two weeks.
But crude and gasoline prices may eventually reverse because despite the recent supply drop in the U.S., oil and gasoline inventories remain above their five-year averages.
“There is little evidence that the stronger U.S. economy is leading to a recovery in U.S. oil demand,” said commodities analyst Caroline Bain of the Economist Intelligence Unit. “While geopolitical risk, related to the unrest in Egypt and the Middle East more generally, is currently buoying oil prices, if this risk were to fade, there will be few pillars of support for the oil market in the second half of this year.”
On a similar note, the Paris-based International Energy Agency said expectations that forecasts for 2014 should give those betting on rising oil prices “some cause for alarm.”
The IEA expects supply growth to result in an additional 1.3 million barrels of oil a day in 2014, while global demand is seen growing by just 1.2 million barrels a day next year.
“Non-OPEC supply growth looks on track to hit a 20-year record next year,” the IEA said Thursday in its latest monthly oil market report. “While demand growth is also forecast to pick up momentum … this will still fall short of forecast non-OPEC supply growth.”
The IEA pointed to growing oil production in the United States and Canada as the key source of the extra supplies.
“North American supplies are set to grow strongly, outpacing declines elsewhere,” the IEA said.
In other energy futures trading on the New York Mercantile Exchange:
— Wholesale gasoline fell 2 cents to $2.99 a gallon.
— Natural gas fell 8 cents to $3.60 per 1,000 cubic feet.
— Heating oil fell 1 cent to $2.99 a gallon.
Associated Press writer Pablo Gorondi contributed to this report from Budapest.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
While the clock is ticking there is still a little time left to help the Salvation Army provide Christmas for local kids and families in need.A shorter Christmas season and nasty weather aren't making it easy.
Two Hays men are living out their dream by brewing and distributing their own craft beer.
The Food and Drug Administration is hoping to limit antibiotic resistant diseases in humans by decreasing the use of the drugs in animals processed for meat.
Boeing is shifting hundreds of jobs to Alabama, Missouri and South Carolina as it restructures its research and technology operations.
'Tis the season for giving, but it is also the season that some can take advantage of people's generosity.
Kansas Lottery players will want to check their Powerball tickets very carefully today.
Study finds women at high risk for breast cancer were half as likely to develop the disease while taking new drug Arimidex.