Oil price slide on surprise gain in US crude stockpiles

21st July 2010, Comments 0 comments

Oil prices fell Wednesday, giving up early gains as traders reacted to an unexpected increase in crude reserves that suggested weaker demand in key energy consumer the United States.

New York's main contract, light sweet crude for delivery in September, sank 49 cents to 77.09 dollars a barrel.

Brent North Sea crude for September dropped 29 cents to 75.93 dollars.

The US Department of Energy (DoE) announced Wednesday that American crude reserves rose 400,000 barrels in the week ending July 16.

The news shocked traders because market expectations had been for a large drop of 1.3 million barrels, according to analysts polled by Dow Jones Newswires.

The DoE said gasoline (petrol) inventories grew 1.1 million barrels last week, well above the 700,000-barrel increase forecast by analysts.

Stocks of distillates, which include diesel and heating fuel, added 3.9 million barrels, more than double expectations for a hefty gain of 1.6 million.

Torbjorn Kjus, analyst at DnB NOR Markets, described the DoE report as "bearish," indicating that it would likely pull prices lower.

The New York stock market, meanwhile, traded lower on Wednesday as investors digested company earnings and braced for comments on the health of the US economy by Federal Reserve chief Ben Bernanke.

The blue-chip Dow Jones Industrial Average rose slightly at the open as market sentiment was lifted by improved company results but the gains were wiped out on concerns over the US economic recovery.

Stock market investors were initially buoyed by excellent second quarter profits by Apple and better-than-expected earnings by top banks Morgan Stanley, Wells Fargo and soft drinks giant Coca Cola.

© 2010 AFP

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