Business | Oil & Gas
Oil falls below $115 as US report shows big jump in stockpiles
US crude stocks increased by 3.8 million barrels, the Energy Information Administration said, far more than the 300,000-barrel increase expected in a Reuters poll of analysts.
- Reuters
- Published: 00:45 May 1, 2008
London: Oil fell below $115 a barrel Wednesday after a US government report showed crude oil stockpiles rose much more than expected in the world's top energy consumer.
US crude stocks increased by 3.8 million barrels, the Energy Information Administration said, far more than the 300,000-barrel increase expected in a Reuters poll of analysts.
"Generally it's a bearish number, particularly on the crude oil side with a larger-than-expected build," said Eric Wittenauer, analyst at Wachovia Securities in St Louis.
US crude fell 87 cents to $114.76 a barrel by 1446 GMT, retreating further from the record high of $119.93 reached on Monday. London Brent was off 70 cents at $112.73.
The EIA report also showed a 1.5 million barrel decline in inventories of gasoline that could limit the decline for prices. Analysts expected stocks of the motor fuel would fall by 700,000 barrels.
"The gasoline number is modestly supportive for the product but right now it seems like the crude oil market is weighing on the gasoline futures," Wittenauer said.
Oil's drop followed a more than $3 slide on Tuesday when a rebound in the dollar and easing concern about supply disruptions from Nigeria to the North Sea pressured the market.
Attention later yesterday was on the latest interest-rate announcement by the Federal Reserve and the reaction of the US dollar. The decision was expected at around 1815 GMT.
The Fed was expected to make a quarter-point cut in interest rates, but traders were also expecting it to signal a pause in its rate-cutting campaign, supporting the dollar. Oil's direction after the US interest-rate announcement will depend in part on how the dollar reacts, analysts said.
"Today's Fed decision - should it involve leaving rates unchanged - could boost the dollar and pressure commodities," said MF Global in a report.
Dollar weakness has been supporting oil and other commodities as investors seek a hedge against inflation.
Oil came under pressure earlier in the session as striking ExxonMobil oil workers in Nigeria pledged to return to work, raising hopes that shut output would soon resume in the world's eighth largest exporter.
The strike in Nigeria started last week and shut nearly all the US oil company's 800,000 barrels per day of production there. Union leaders had said on Tuesday they were going ahead with their action.
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