Oil prices decline before US energy report
World oil prices weakened on profit taking on Wednesday, one day after striking two-year peaks, as traders eagerly awaited official news on crude inventory levels in the United States.
New York's main contract, light sweet crude for December, fell 20 cents to 86.52 dollars a barrel.
London's Brent North Sea crude for delivery in December delivery slid 26 cents to 88.07.
"Crude oil prices pared early gains and slid lower in correction to trade around 86 dollars, as the strong US dollar and weaker-than-expected data from China weighed on market sentiment," said Sucden analyst Myrti Sokou.
She added: "It seems that oil market is overbought, as crude oil prices have been on an upside momentum ... since September 30, mainly driven by the currency movements.
"However, the fundamentals (of supply and demand) do not currently support the recent levels of oil prices."
Crude futures has also fallen on Tuesday in profit-taking, snapping a six-day winning streak, after New York crude had struck 87.63 dollars -- its highest level since early October 2008.
Later on Wednesday, the US government's Department of Energy was publishing a weekly report on oil inventories for the week ending November 5.
Market expectations are for an 800,000-barrel increase, and gasoline or petrol stockpiles are forecast to drop by 900,000 barrels, according to analysts polled by Dow Jones Newswires.
Distillates, which include diesel and heating fuel, are predicted to drop by around two million barrels.
Traders will also absorb a number of other key economic data releases later on Wednesday.
"It is quite an interesting and busy day in the macroeconomic indicators, including US weekly jobless claims as well as US International trade figures for September and the US Federal budget for October," said Sokou.
"That could provide further signs of the US economic conditions and it is likely to affect the US dollar movements."
Prices fell on Wednesday despite bullish demand forecasts by the International Energy Agency (IEA).
On Tuesday, the IEA forecast that crude would rise to 113 dollars a barrel by 2035, and projected demand to rise 18 percent between 2009 and 2035, driven by developing countries, with nearly half the increased demand coming from China.
© 2010 AFP