Oil prices slide on US inventory data

28th July 2010, Comments 0 comments

Oil prices fell by more than a dollar on Wednesday after a huge unexpected jump in crude stockpiles in the United States added to nerves caused by fading consumer confidence.

New York's main contract, light sweet crude for delivery in September, dropped 1.11 dollars to 76.39 dollars a barrel.

Brent North Sea crude for September shed 1.01 dollars to 75.12 dollars in late London trade.

The US Department of Energy said crude oil inventories jumped 7.3 million barrels last week in the United States -- the world's biggest energy consuming nation.

Analyst had expected a drop of 1.4 million barrels, according to a poll compiled by Dow Jones Newswires.

The data comes on top of growing evidence of weak US consumer confidence which has sapped hopes for a strong economic recovery.

"Falling consumer confidence and the growing likelihood of a double-dip in house prices have put a further dent in the already deteriorating outlook for consumption growth," research house Capital Economics said in a note to clients.

"Without consumers on board, the economic recovery is looking dangerously vulnerable."

The United States is the world's biggest economy and the largest energy consuming nation.

Oil prices tumbled in US trade Tuesday after a closely-watched survey showed that American consumer confidence plunged to its worst level in five months due to concerns about unemployment amid an uncertain economic outlook.

The Conference Board, a business research firm, said its consumer confidence index, which had declined sharply in June, retreated further this month.

The index fell to 50.4 points from 54.3 last month and is now at its lowest level since February.

"It appears that lower equity prices, signs of a slowdown in activity and fears that the jobs recovery is fading have wiped out the previous optimism," Capital Economics said.


© 2010 AFP

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