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Oil drops below $60 as US supplies surge
Oil reversed early gains and dropped below $60 a barrel on Thursday as a downturn in US equities added to pressure from high US oil inventories and persistent concerns about the timing of any economic recovery.
- Reuters
- Published: 22:45 July 9, 2009
London: Oil reversed early gains and dropped below $60 a barrel on Thursday as a downturn in US equities added to pressure from high US oil inventories and persistent concerns about the timing of any economic recovery.
US light crude for August delivery fell 45 cents to $59.69 a barrel by 1428 GMT - on course for the seventh straight day of declines. London Brent crude eased 11 cents to $60.32 a barrel.
Earlier Wednesday, US crude prices had rebounded as high as $61.62 after a 4 per cent fall on Wednesday that meant oil was more than 15 per cent lower so far in July.
Analysts said oil markets yesterday were undermined when, after a bounce in European shares, US equities turned lower shortly after the opening.
"This [Thursday] morning's bounce served notice that the equity and currency markets remain as formidable price influences to the oil," said Jim Ritterbusch, President of Ritterbusch and Associates in Galena, Illinois.
"The crude, stock market and US dollar are maintaining some correlation to reflect an expansion and contraction in risk appetite as additional economic input is received."
US diesel and heating oil stocks have swelled to their highest level in almost 25 years after jumping by 3.7 million barrels last week, data from the Energy Information Administration (EIA) showed.
The drop in oil prices since the end of June was the longest and steepest decline so far in 2009. Prices had been rising since February, more than doubling from lows hit near $33, as traders started to price in an eventual recovery.
But many analysts cautioned prices had risen ahead of the real economy, with unemployment still climbing and global oil inventories mounting.
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