Oil prices drop after US data

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World oil prices fell on Wednesday as official data showed an unexpected rise in US crude inventories.

Oil futures had risen earlier in the day on the back of a weaker dollar, traders said.

Brent North Sea crude for delivery in November fell 76 cents to 77.66 dollars a barrel in late London trade.

New York's main contract, light sweet crude for November, dropped 52 cents to 74.45 dollars.

The US Department of Energy announced that crude stockpiles climbed by one million barrels last week, against analyst expectations for a drop of 1.7 million barrels.

Crude futures had risen earlier on Wednesday as doubts over the strength of the US economy surfaced after the Federal Reserve warned that "the pace of recovery in output and employment has slowed" in the United States.

The Fed had also on Tuesday said it was prepared to take new stimulus measures if necessary to keep the US economy on track while leaving interest rates at record lows.

The news sent the dollar reeling against the euro and the yen. A weak dollar stimulates demand for dollar-priced commodities like oil, which become cheaper for buyers using stronger currencies.

Elsewhere on Wednesday, pirates boarded an oil industry supply vessel off oil producer Nigeria and seized three French seamen, in the second hostage drama for French energy workers in West Africa in less than a week.


© 2010 AFP

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