Oil prices weaken after US energy report

9th January 2013, Comments 0 comments

Global oil prices weakened on Wednesday, erasing gains seen earlier in the day on news of a sharp drop in demand in top crude consumer the United States.

Brent North Sea crude for delivery in February declined by 39 cents to $111.55 a barrel in London late afternoon trade.

New York's main contract, light sweet crude for February or West Texas Intermediate (WTI), reversed nine cents to $93.06 per barrel.

"Crude oil turned lower in the afternoon after making a positive start," said analyst Fawad Razaqzada at trading firm GFT Markets.

"The reversal came after the EIA said inventories rose by 1.3 million barrels last week. The build suggests demand is not quite as strong and supply remains abundant in the United States.

"Looking forward to the remainder of the week, we will have important data releases from China, the world's second largest consumer of oil. Any good numbers there will be seen as oil-positive."

The US government's Energy Information Administration (EIA) announced that American crude oil stocks grew by 1.3 million barrels in the week ending January 4.

However, this undershot market expectations for a 2.2-million-barrel gain, according to analysts polled by Dow Jones Newswires.

The EIA added that gasoline or petrol stockpiles surged by 7.4 million barrels. That was far higher than forecasts for a rise of 2.1 million barrels. Reserves of distillates -- which include diesel and heating fuel -- soared 6.8 million barrels, well beyond the expected 1.4-million-barrel increase.

Crude futures also fell Wednesday on lingering concerns over the American economy despite better-than-expected earnings from aluminium giant Alcoa, analysts said.

Global markets have shifted their attention from the US fiscal debate to corporate earnings to gauge the health of the world's biggest economy and largest oil consuming nation going into 2013, analysts said.

"The recent fiscal cliff-inspired rally is fast becoming the 'Ghost of Christmas Past' as traders shift their focus to US corporate earnings," said Jason Hughes, head of premium client management at IG Markets in Singapore.

"Solid gains notched up in the first week of the year across global markets are so far just being nibbled at by fears of disappointing fourth-quarter profits across US blue chip stocks."

US aluminium producer Alcoa on Tuesday reported earnings of $242 million in the fourth quarter of 2012, compared with a year-earlier loss of $191 million. The results were boosted by a gain of $161 million stemming from the sale of a hydroelectric asset.

The company also stayed in the black for the full year, despite aluminium prices falling by 12 percent.

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© 2013 AFP

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