Business | Oil & Gas
Crude drops over $1 to $117 after US inventories rise unexpectedly
Oil fell to a new three-month low near $117 a barrel yesterday after government data showed bigger-than-expected increases in crude and distillate stocks in the US last week, the world's top oil consumer.
- Reuters
- Published: 21:19 August 6, 2008
London: Oil fell to a new three-month low near $117 a barrel yesterday after government data showed bigger-than-expected increases in crude and distillate stocks in the US last week, the world's top oil consumer.
US light crude was $1.69 down at $117.48 a barrel by 1538 GMT, off highs of $120.49 hit earlier in the session. London Brent crude was down $1.66 at $116.04 a barrel.
The US Energy Information Administration (EIA) said crude oil stocks in the world's biggest energy user rose by 1.7 million barrels last week, against expectations of an increase of 300,000 barrels.
Gasoline inventories fell by 4.4 million barrels compared with forecasts of a 1.2 million barrels drop, while stocks of distillate fuels, which include heating oil and diesel, rose by 2.8 million barrels, 700,000 barrels more than expected.
"It's mixed data - it's bearish for distillates, bearish for crude oil and bullish for gasoline. One key question is how much we're going to make out of the draw in gasoline when we only have one month left in the driving season," said Tim Evans, energy analyst at Citi Futures Perspective.
Oil earlier bounced off near three-month lows after an explosion on the Baku-Tbilisi-Ceyhan oil pipeline in eastern Turkey late on Tuesday halted oil flows along the key pipeline, providing a bullish backdrop.
It added to Nigerian supply concerns and the threat of disruptions from Iran .
Oil has fallen almost $30 from its mid-July peak of $147.27 a barrel - a drop of nearly 20 per cent - amid growing evidence that high prices have finally started to take a toll on demand. "The next support area is $117. If we break through $117 we are probably not going to be able to create any upward momentum in the market," said Rob Kurzatkowski, futures analyst at optionsXpress.
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