Oil falls on glut worries as rally comes into question

(MENAFN- Arab News) NEW YORK: Oil fell on Friday as renewed worries of a supply glut weighed on a market feared to be overpriced from a recent rally.
Gasoline and heating oil joined the slide pulling the petroleum complex lower as analysts and traders said the higher demand for such oil products and drop in crude stockpiles lately weren't enough to justify total inventory numbers.
Futures of North Sea Brent oil are up nearly 20 percent since the end of March while US crude has risen almost 30 percent a rebound that appears to have overshot and could be about to correct.
'A mood change is in the air' Eugen Weinberg global head of oil and commodities research at Commerzbank in Frankfurt told the Reuters Global Oil Forum. 'The oil price rally looks like it may be slowly running of steam.'
US crude was down 48 cents at $59.40 a barrel by 10:53 a.m. EDT (1453 GMT) having fallen more than $1 earlier as a stronger dollar pulled down commodities denominated in the currency such as oil. For the week though US crude was on track to a ninth straight week of gains.
Brent was down 25 cents at $65.45 a barrel also dropping more than $1 earlier in the session.
The drop came even as investors kept a close eye on rising tensions in the Middle East after Iranian vessels fired shots at a Singapore-flagged tanker in the Gulf on Thursday.
The International Energy Agency says OPEC is pumping at least 2 million barrels per day (bpd) more than required.
The US Energy Information Administration says world stocks are rising at 1.95 million bpd this quarter and will build until at least through 2016.
US demand for fuel is likely to pick up in the second half while global production runs well ahead of consumption. Without a major unexpected disruption the glut will stay analysts say.
'Sure US gasoline demand has been strong but we still have almost 485 million barrels in crude inventories. That's a ton in supply' said Chris Jarvis at Caprock Risk Management in Frederick Maryland.
Oil services firm Baker Hughes will release weekly US rig count data later on Friday. The data has become a closely watched indicator to gauge adjustments in US production.