Oil prices slide on US energy report

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Oil prices sank on Wednesday as investors locked in recent profits and reacted to news of a lighter-than-expected drop in crude reserves in top energy consumer the United States.

Brent North Sea crude for delivery in October dived 1.04 dollars to 75.89 dollars a barrel in late afternoon London trade.

New York's main contract, light sweet crude for September, shed 1.27 dollars to 74.50 dollars.

Prices had jumped on Tuesday to snap five straight days of losses on the back of a weaker dollar and rising equities.

But the market fell again on Wednesday as many traders took profits and the US government's Department of Energy (DoE) revealed that American crude reserves declined by 800,000 barrels in the week ending August 13.

That dashed expectations for a 1.3-million-barrel weekly drop, according to analysts polled by Dow Jones Newswires, and it also appeared to indicate weaker-than-expected demand for energy.

The DoE added that gasoline or petrol inventories were flat last week, while analysts had predicted a drop of 500,000 barrels.

The weekly US report is closely watched by the oil market because the country is the world's biggest energy consumer, with China and Japan in second and third place respectively.

© 2010 AFP

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