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Oil Prices Fall After Big Rise in US Inventories

Posted on: Thursday, 8 December 2005, 09:00 CST

Oil prices fall after big rise in US inventories NEW YORK, Dec. 7 (Xinhua) --Oil prices fell back below 60 dollars a barrel on Wednesday after US inventory data showed a sharp rise in supplies, easing concerns about a supply crunch.

US crude settled 73 cents lower at 59.21 dollars a barrel, while London Brent slipped 63 cents to 56.98 dollars.

Selling was spurred by US government data showing a 2.7 million barrel rise in crude stocks to 320.3 million barrels, 32.1 million barrels higher than a year ago.

The data also showed rises of 2.7 million barrels in gasoline and distillate stocks, which include heating oil.

The government data also showed that oil imports grew by almost 900,000 barrels per day to 10.6 million barrels per day and that US refiners ran their plants last week at almost 91 percent of capacity, up more than 1 percent from the prior week.

However, despite swelling stocks, traders were reluctant to sell off too sharply after a new threat from al Qaeda. Al Qaeda claimed a direct hit on Iraq's Basra Oil Terminal in the Gulf last year. Iraq's oil pipelines are regularly put out of action by sabotage.

Colder weather expected until the weekend in the US Northeast, the world's biggest heating oil market, also curbed selling as traders worried a fierce winter could drag down stocks from their current levels.

The Organization of Petroleum Exporting Countries (OPEC) has been pumping at around 30 million barrels per day, close to capacity, for much of this year in an effort to moderate prices.

The cartel meets in Kuwait next week to reconsider its output policy, but OPEC ministers have so far said they are comfortable with current prices and see no need to adjust production.

Source: Xinhua News Agency - CEIS

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