(Updates prices, adds details)
By Richard Valdmanis
NEW YORK, May 29 (Reuters) - Oil prices dropped $4 on
Thursday as concerns about global energy demand and strength in
the dollar countered a government report showing the biggest
decline in U.S. stockpiles since 2004.
U.S. crude <CLc1> settled down $4.41 at $126.62 a barrel,
while London Brent <LCOc1> gave up $4.04 to $126.89 a barrel.
The decline extends oil's retreat from last week's record
above $135 a barrel amid growing signs that global energy
demand growth is slowing under the strain of high costs and
economic turmoil in the United States.
Gains in the U.S. dollar after a report that the U.S.
economy grew in the first quarter at a faster pace than
previously estimated added pressure to commodity markets by
diminishing the purchasing power of buyers using other
currencies.
Oil had briefly surged into positive territory Thursday
morning after the U.S. Energy Information Administration
released a report showing an 8.8 million-barrel drop in U.S.
crude stockpiles, the biggest fall since a hurricane shut
offshore oil platforms in September 2004. []
The unexpected decline "was due to temporary delays in
crude oil tanker off-loadings on the Gulf Coast," EIA said.
Louisiana Offshore Oil Port (LOOP), the nation's only U.S.
deep-water port, said Thursday some crude oil tankers canceled
scheduled deliveries last week. []
"Once again, on further review, we should not read too much
into one week's report from the EIA," said Phil Flynn, analyst
at Alaron Trading in Chicago.
Analysts in a Reuters poll had forecast the stock level to
be unchanged.
Stockpiles at Cushing, Oklahoma, the delivery point of U.S.
crude traded on the New York Mercantile Exchange (NYMEX),
increased 700,000 barrels, according to the EIA, also tempering
the bullishness of the report. []
DEMAND SLOWING
The EIA said on Wednesday U.S. oil demand in March fell to
the lowest level for that month in five years, the latest sign
that consumers are cracking under the strain of high oil
prices.
In Britain, gasoline demand in April fell 7 percent from a
year ago while diesel demand fell nearly 2 percent, government
data showed on Wednesday.
Asian countries have also been reviewing fuel subsidies,
which have sheltered drivers from the shock of steep price
rises, intensifying fears of an Asian energy demand slowdown.
India's oil minister, Murli Deora, said on Thursday that
the government will take a decision on raising fuel prices in
the next two to three days. []
Taiwan, Indonesia and Sri Lanka have already raised
domestic fuel prices.
(Reporting by Richard Valdmanis, Matthew Robinson, Gene Ramos
and Robert Gibbons in New York; Ikuko Kao in London; Luke
Pachymuthu in Singapore; editing by Matthew Lewis)
