World oil prices drop before US data

31st August 2011, Comments 0 comments

Oil prices slid on Wednesday as traders awaited employment and energy inventories data in the United States, which is the world's top crude consuming nation.

Brent North Sea crude for delivery in October dropped 27 cents to $113.75 in late morning deals.

New York's main contract, West Texas Intermediate (WTI) for October shed $1.15 to $87.75 a barrel.

Later on Wednesday, at 1430 GMT, the US Department of Energy (DoE) will publish its latest snapshot of American crude oil inventories for the week ending August 26.

"Everyone's waiting for the reports later today. The market is very much focusing on the stats," said Thina Saltvedt, senior oil market analyst at Nordea Bank Norge.

Crude stockpiles are expected to climb by 200,000 barrels, according to analysts polled by Dow Jones Newswires. Gasoline or petrol reserves are forecast to drop by one million barrels.

Distillates, which include diesel and heating fuel, are seen rising by 700,000 barrels.

Ahead of the DoE report, traders will absorb the US ADP employment report which could give an early indication of this Friday's crucial non-farm payrolls figures.

"In the current market environment it does not take much to tip the balance...Uncertainty is high, in particular regarding whether the U.S. is heading towards another recession or not," said SEB Commodity Research in a note.

On Tuesday, the oil market was dented after US industry body the American Petroleum Institute (API) published data that showed a steep rise in crude inventories.

The API forecast Tuesday a that crude stockpiles had jumped 5.1 million barrels last week.

Analysts added that geopolitical fears in the oil-producing Arab region sparked by Israel and Iran's naval posturing in the Red Sea was providing some support to prices.


© 2011 AFP

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