You are here
Oil drops for 4th day on big rise in US supplies
NEW YORK—The price of oil fell yesterday after the US reported an unexpectedly large increase in crude stockpiles. Oil supplies grew last week by 5.9 million barrels, or 1.6 per cent, the Energy Department said. At 375.1 million barrels, the US oil inventory is 11.1 per cent above year-ago levels. Analysts expected a much smaller increase.
Benchmark oil fell 94 cents, or about one per cent, to finish at US$85.73 per barrel in New York. The price has dropped almost seven per cent since closing Thursday at US$92.10. Brent crude fell 40 cents to end at US$107.85 per barrel in London. Jim Ritterbusch of Ritterbusch and Associates said the oil market may be looking forward to Friday’s initial estimate of US third-quarter gross domestic product.
“Any additional indications of weakening in the world’s largest economy could force further liquidation out of the oil space,” he said. In other energy futures trading in New York:
• Wholesale gasoline fell less than a penny to finish at US$2.60 per gallon. Gasoline supplies grew by 1.4 million barrels to 198.6 million barrels last week, the government said.
• Heating oil also fell less than a penny to end at US$3.04 per gallon.
• Natural gas fell 8.5 cents to finish at US$3.45 per 1,000 cubic feet, reversing Tuesday’s gains.
Crude oil stocks in the United States jumped 5.9 million barrels last week, the US Energy Information Administration said in a weekly report, well above the increase of 1.9 million barrels in a survey of analysts. Gasoline stocks rose more than expected, total distillate stockpiles eased slightly less than the consensus forecast and demand for the products over the previous four weeks was below the year-ago period.
Oil prices pushed higher earlier on lift when a survey of purchasing managers showed China’s economy is slowly picking up from its weakest period of growth in three years. But while the HSBC Flash Manufacturing Purchasing Managers Index (PMI) hitting a three-month high of 49.1 in October was supportive for oil prices, the reading was still below the 50-point mark that separates expanding from shrinking busines activity.
Brent December crude fell US$1.13 to US$107.12 a barrel by 1.15 pm (1715 GMT), below the 100-day moving average of US$107.50. Wednesday’s US$106.80 low was the lowest for front-month Brent since September 20. The last time Brent fell seven straight sessions was in July 2010. Experiencing a fifth straight slide, US crude was down US$1.30 at US$85.37 a barrel, having fallen to US$84.94, the lowest since July 12.
Weak data from Europe
Poor economic data from Europe pulled oil prices off early peaks ahead of the US oil inventory report. Markit’s Composite Purchasing Managers’ Index, which polls around 5,000 businesses across the 17-nation bloc and is viewed as a reliable growth indicator, fell to 45.8 this month, the lowest reading since June 2009.
Manufacturing PMI in Germany, Europe’s largest economy, fell unexpectedly and business sentiment dropped for the sixth consecutive month to its lowest in more than 2-1/2 years. “Not only do these data points support the slowing economic scenario, but the PMI manufacturing index is an energy-sensitive index and directly translates to slower energy demand,” said Dominick Chirichella of New York’s Energy Management Institute.
User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff. Guardian Media Limited accepts no liability and will not be held accountable for user comments.
Please help us keep out site clean from inappropriate comments by using the flag option.
Guardian Media Limited reserves the right to remove, to edit or to censor any comments. Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.