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31 May 2005 16:20  Oil prices fall, despite supply fears


Crude prices fell in lackluster European trading Tuesday as investors shook off fears that U.S. gasoline demand will outstrip supplies in the summer driving season. Healthy increases in U.S. crude inventories are adding to the bearish sentiment in the market, analysts said. Although market fundamentals are showing signs of increasing global demand and potentially insufficient supply, prices do not seem to spike, surprisingly," said Orrin Middleton, energy analyst at Barclays Capital in London. "Following last week's rally, speculators are entering the market on the sales side," Middleton added. Investors were keeping a close tab on currency volatility after the French rejection of the proposed EU constitution pushed the euro to a seven-month low. The U.S. dollar was gaining against the weakening European currency, and a stronger American dollar usually has a downward effect on oil prices.
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