Oil prices dampened by stock market losses

23rd September 2010, Comments 0 comments

World oil prices retreated on Thursday, dragged down by downbeat equity markets and after an unexpected rise in US crude inventories, traders said.

Brent North Sea crude for delivery in November shed 75 cents to 77.20 dollars a barrel in early afternoon London trade.

New York's main contract, light sweet crude for November, dipped 62 cents to 74.09 dollars.

"Crude oil prices retreated following losses in the global equity markets that weighed on sentiment," said Sucden analyst Myrto Sokou.

"Furthermore, the weaker-than-expected eurozone and German PMI data added further pressure and prompted some sell-offs in the financial markets.

"The oil market also reacted negatively and crude oil prices extended their losses amid continuing worries about the levels of oil demand in the near term."

European stock markets fell Thursday, reversing opening gains, as investor sentiment was dented by news of weak eurozone manufacturing data and a surprise contraction in the Irish economy.

September's eurozone purchasing managers' index (PMI), a survey of 4,500 euro area companies compiled by research group Markit, came in far weaker than expected.

The combined manufacturing and services index for September crashed to 53.8 points from 56.2 in August.

Prices also weakened on Wednesday as traders digested a sizeable jump in US crude oil stockpiles, which climbed by one million barrels in the week ending September 17. Market expectations had been for a drop of 1.7 million barrels.

"The latest set of weekly data on US inventory levels was anything but positive," said analyst Tamas Varga at PVM Oil Associates.

"There were increases in major product stocks despite analysts' expectations of draws in crude oil and gasoline (petrol) inventories."

© 2010 AFP

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