Crude drops on EIA demand growth report

Crude oil prices fell on Tuesday after the US Energy Information Administration issued a report which said that the demand for oil and products made from oil will not grow as fast as expected this year, that prices won’t go as high as previously predicted, and that prices will likely fall in 2009.

Also sending prices lower was anticipation of a separate EIA report, due Wednesday, which is expected to show that while distillates inventories fell last week, crude oil and gasoline stockpiles will be seen to have grown.

West Texas Intermediate crude for March delivery dropped 81 cents on the session to $92.78 per barrel on the New York Mercantile Exchange.

Nymex March gasoline was 3 cents lower to $2.37 per gallon, while March heating oil dropped 1 cent to $2.59 per gallon.

Despite the insistence of the Venezuelan oil minister that his country is “ready” to cut off sales to the US as President Hugo Chavez has threatened, a member of the board of the South American nation’s state-owned oil company said the action would not likely happen because it would cost the country money, reiterating most analysts’ assessments of the situation.