April 07, 2005 12:38 PM EDT
Oil futures prices fell nearly $2 a barrel Thursday afternoon, following the lead of gasoline futures, and brokers said there appeared to be further downward momentum.
"It's collapsing," said Ed Silliere, a broker at Energy Merchant Intermarket Futures in New York. "The market was extremely overbought."
Light, sweet crude for May delivery dropped $1.97 to $53.88 a barrel in afternoon trade on the New York Mercantile Exchange. Gasoline futures dropped 7.8 cents to $1.58 per gallon, or roughly 15 cents below last Friday's settlement price.
Mario Chavez, a broker at ABN Amro in New York, said the steady decline in prices in recent days triggered a huge wave of technical selling. "It was crazy," he said.
The selloff came as the U.S. Energy Department on Thursday predicted that gasoline prices, now averaging $2.22 a gallon nationwide, would peak at about $2.35 a gallon this summer.
On Wednesday the U.S. Energy Department said the supply of unleaded gasoline stood at 212.3 million barrels, or 5.5 percent higher than last year. However, gasoline demand remained healthy, up 2 percent from a year ago.
Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures, said he expects high gasoline prices to persist as "people are accumulating inventories before the summer driving season."
The government report also showed that the nation's inventory of crude oil was 317.1 million barrels, or 8 percent higher than last year.
"U.S. oil demand is holding up well, and will help to support prices at lower levels," investment bank Barclays Capital said in a note. "There is ... nothing in the U.S. data to support another push up toward $60 yet."
Emori said the current oil market remains "highly exaggerated," and that if prices followed market fundamentals, they should hover around the low $40 range.
"Although demand still remains strong, supplies are normal, as seen from the U.S. reports," he said. "Even the current spare capacity is not that tight."
Oil futures prices fell nearly $2 a barrel Thursday afternoon, following the lead of gasoline futures, and brokers said there appeared to be further downward momentum.
"It's collapsing," said Ed Silliere, a broker at Energy Merchant Intermarket Futures in New York. "The market was extremely overbought."
Light, sweet crude for May delivery dropped $1.97 to $53.88 a barrel in afternoon trade on the New York Mercantile Exchange. Gasoline futures dropped 7.8 cents to $1.58 per gallon, or roughly 15 cents below last Friday's settlement price.
Mario Chavez, a broker at ABN Amro in New York, said the steady decline in prices in recent days triggered a huge wave of technical selling. "It was crazy," he said.
The selloff came as the U.S. Energy Department on Thursday predicted that gasoline prices, now averaging $2.22 a gallon nationwide, would peak at about $2.35 a gallon this summer.
On Wednesday the U.S. Energy Department said the supply of unleaded gasoline stood at 212.3 million barrels, or 5.5 percent higher than last year. However, gasoline demand remained healthy, up 2 percent from a year ago.
Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures, said he expects high gasoline prices to persist as "people are accumulating inventories before the summer driving season."
The government report also showed that the nation's inventory of crude oil was 317.1 million barrels, or 8 percent higher than last year.
"U.S. oil demand is holding up well, and will help to support prices at lower levels," investment bank Barclays Capital said in a note. "There is ... nothing in the U.S. data to support another push up toward $60 yet."
Emori said the current oil market remains "highly exaggerated," and that if prices followed market fundamentals, they should hover around the low $40 range.
"Although demand still remains strong, supplies are normal, as seen from the U.S. reports," he said. "Even the current spare capacity is not that tight."
