SINGAPORE, April 3 - Oil prices fell heavily again on Thursday bringing losses so far this month to 10 percent as U.S. crude supplies showed a surprisingly strong recovery from record lows and U.S. forces advanced on Baghdad. U.S. light crude dropped 81 cents, or 2.8 percent, to $27.75 a barrel. So far in April, crude has fallen $3.30 as fears have eased of possible prolonged disruptions to global supplies. London's Brent crude traded down 61 cents to $24.60 a barrel. Latest bearish sentiment was fuelled by a big jump in U.S. crude inventories, which grew by 6.8 million barrels last week, by far outpacing forecasts of a 2.75 million barrel rise. The Energy Information Administration, the statistical arm of the U.S. Department of Energy, reported on Wednesday that crude stocks rose to 280.7 million barrels in the week to March 28 as imports reached 10.4 million barrels per day, the largest average on record. Stocks of gasoline increased 1.7 million barrels to 200.7 million barrels against expectations of a 700,000-barrel rise. Refiners usually build gasoline stocks at this time of year in preparation for peak summer demand.
The rises still left tanks at a deficit to year-ago levels, with crude down by more than 50 million barrels and gasoline off by 13 million barrels. "Underlying supply/demand pressures in the global oil balance do not support the notion of prices falling much from today's levels," Merrill Lynch's Michael Rothman said in a note. "Storage remains well below normal levels and that deficit is expected by us to persist into the back half of the year, and OPEC's spare capacity remains limited."
OPEC TURNS UP TAPS
The Organisation of the Petroleum Exporting Countries turned up production taps in March, fulfilling its pledge to maintain stable supplies to the global 77 million bpd market and counter supply disruptions from Iraq, Venezuela and Nigeria. Nigeria's production remains down by almost 40 percent, more than 800,000 bpd, after Western oil companies withdrew from parts of the Niger Delta because of bloody ethnic clashes. A survey pegged March output by the 10 members, excluding sanctions-bound Iraq, at 26.45 million bpd, 1.95 million bpd above the group's production ceiling of 24.5 million bpd. Most of the gains came from top producer Saudi Arabia. The build in fuel stocks in the United States, the world's biggest oil consumer, gives more of a cushion against the loss of Iraq's 1.7 million bpd of crude exports since the days leading up to the March 20 launch of the war to oust President Saddam Hussein. Worries about a prolonged conflict sent prices sharply higher last week. U.S. military sources said vanguard American units had advanced to within 30 km (20 miles) of the southern outskirts of Baghdad, prompting some oil traders to speculate that hostilities might end soon.//