Oil prices slide after US energy report
NEW YORK (AFP) — Oil prices fell sharply in volatile trade Thursday as traders reacted to a weekly US energy report that revealed a slump in crude oil inventories.
Prices had initially jumped higher in the wake of the report's release, but values subsequently tumbled as some analysts questioned if energy demand was dropping amid sky-high prices.
New York's main oil futures contract, light sweet crude for July delivery, lost a hefty 4.41 dollars to close down at 126.62 dollars per barrel, after spiking above 133 dollars following the release of the weekly stockpile snapshot.
In London, Brent North Sea crude for July delivery tumbled 4.04 dollars to settle lower at 126.89 dollars.
The slide in prices comes after both contracts had struck historic peaks a week ago, with Brent hitting 135.14 dollars and New York prices reaching 135.09 dollars on tight supply fears.
Traders said prices may also have dropped Thursday as some market speculators likely decided the time was ripe to engage in a bout of profit taking.
The price moves came after the US Department of Energy (DoE) reported that American crude reserves slumped 8.8 million barrels in the week ending May 23.
Gasoline or petrol stockpiles tumbled 3.2 million barrels. Market expectations had been for no change.
"The first reaction was bullish, then we saw demand is down ... so we wondered where is all the crude going," said Sucden analyst Robert Montefusco.
The DoE report was published one day later than usual due to a public holiday in the United States on Monday.
MF Global trader Robert Laughlin said that despite the prices falls, "concerns still exist that global demand outstrips supply."
"Whilst high prices have caused worldwide condemnation, the 'man in the street' is now accepting that expensive fuel is here to stay," he said.
British Prime Minister Gordon Brown on Wednesday warned that the world was facing a "great oil shock" that required a comprehensive international strategy to address.
The Organization of the Petroleum Exporting Countries (OPEC), which pumps 40 percent of the world's oil, is reluctant to bend to US-led demands for it to pump more crude to help cool prices.
The price of oil on international markets has risen by about a third since the start of 2008 and rocketed higher from 50 dollars just 18 months ago.
Higher prices have also been underpinned by growing demand in China and other emerging economies such as India, as well as unrest in crude-producing countries, particularly Nigeria, analysts said.
