Oil falls, gives back earlier gains
Price of crude declines as investors look past an unexpected drop in inventories to focus on Wall Street.
 |
| Click the chart for current oil prices. |
NEW YORK (CNNMoney.com) -- Oil prices fell Wednesday, giving back earlier gains, as dour economic news and falling stock prices overshadowed an unexpected drop in U.S. crude supplies.
Light, sweet crude for June delivery fell 83 cents to settle at $58.02 a barrel Wednesday after reaching a high of $59.90 earlier in the session.
Oil briefly traded over $60 a barrel Tuesday - its highest level in six months.
Oil was pressured Wednesday by a big selloff in the stock market. Many oil traders view stocks as a leading economic indicator and a barometer of future energy demand.
Stocks were walloped by a surprise decrease in April retail sales. The dour news damped enthusiasm about a nascent economic recovery, since retail sales makes up the bulk of U.S. gross domestic product.
Also weighing on the market: The Organization of the Petroleum Exporting Countries said Wednesday that world oil demand remains weak and the recent rise in oil prices is not based on economic fundamentals.
The cartel said it expects world oil demand to fall by 1.6 million barrels per day this year. That's 200,000 barrels lower than the estimate a month earlier.
"Considerable risks remain as oil market fundamentals are far from balanced due to the persistent contraction in demand and growing supply overhang," OPEC said in its Monthly Oil Market Report.
The report came one day after the EIA said it expects world oil consumption to fall by 1.8 million barrels per day to 83.67 million in 2009. That's 400,000 more barrels than last month's projection.
Support for oil prices came from a surprise decline in U.S. oil supplies after several weeks of expanding inventory levels.
In its weekly inventory report, the Energy Information Administration said the nation's supplies of crude fell by 4.7 million barrels in the week ended May 8. Analysts surveyed by research firm Platts had expected a gain of 1.4 million barrels.
Gasoline stocks fell 4.1 million barrels versus a forecasted build of 400,000 barrels. Supplies of distillates, used to make diesel and jet fuel, increased by 1 million barrels.
Retail gas prices rose overnight for the 15th time in a row, according to a daily survey by motorist group AAA.
The national average price for a gallon of regular gas now stands at $2.267 after a 1.9-cent gain. Gas prices are up nearly 22 cents over the last 15 days. 
