Oil falls after rise in US inventories

Thursday, January 07, 2010
LONDON: Oil prices fell on Wednesday after data from the United States showed an unexpected build in crude inventories in the world’s largest energy consumer, bringing a 14-percent rally over the last nine days to a halt.

US crude for February delivery fell 61 cents to $81.16 a barrel by 1554 GMT, after rising as high as $82.47, its highest intra-day level since Oct 14, 2008. London Brent crude eased 52 cents to $80.07. US crude oil stockpiles unexpectedly rose by 1.3 million barrels last week while distillate inventories fell 300,000 barrels, against forecasts for a 1.9 million barrel decline, US Energy Information Agency data showed.

Data from the American Petroleum Institute on Tuesday showed gasoline inventories in the United States up 5.6 million barrels in the week to Jan 1 and heating oil stockpiles down 1.3 million barrels. “Between the API and the EIA numbers, this is not adding up to much of an argument for crude above $82 a barrel,” said Addison Armstrong at Tradition Energy in Connecticut.

“The market has been so strong over the past 10 trading days, some sort of pull back and consolidation is warranted.” US crude oil had risen from a low of $69.57 on Dec 15.

Arctic winds have pushed down into the northern hemisphere, freezing Europe and parts of Asia and boosting demand for heating fuel in the United States some 21 per cent above normal.

But a dent in sentiment appeared following data from the American Petroleum Institute (API), released after the market’s close on Tuesday, showed US distillate supplies rose 962,000 barrels last week, against an expected 1.9 million-barrel drop.

“The latest build in distillate stocks should provide a slap in the face to bulls who relied on cold temperatures as a wonder cure,” said David Wech of JBC Energy. Elsewhere icy weather descended on northern China over the last week, bringing heavy snow and record low temperatures to Beijing and causing cities across eastern and central parts of the country to begin rationing power.

Britain’s unusually cold weather spell will likely continue into the second half of January, the Met Office said this week. Belarus on Wednesday insisted Russia should continue billions of dollars in oil subsidies, potentially complicating talks aimed at resolving a dispute over a pipeline that brings 10 per cent of Europe’s crude to market.