Wednesday, 02 May 2012 21:51
LONDON: World oil prices fell on Wednesday as traders digested a larger-than-expected increase in US crude reserves alongside news of record-high inventories at the key hub of Cushing, Oklahoma.
Brent North Sea crude for delivery in June lost 81 cents to $118.85 a barrel in London late afternoon deals.
New York's main contract, light sweet crude or West Texas Intermediate (WTI) for June, fell 72 cents to $105.44 a barrel.
The US Department of Energy (DoE) revealed that American crude reserves rose by 2.8 million barrels in the week ending April 27.
That beat market expectations for a gain of 2.1 million barrels, according to analysts polled by Dow Jones Newswires, and indicated weakening demand in the world's biggest oil consuming nation.
The DoE also added that inventories in Cushing -- the delivery point for New York's benchmark light sweet crude contract -- rose 1.2 million barrels to hit a record high close to 43 million barrels. That beat the previous record peak that was set in April 2011.
At the same time, gasoline or petrol stockpiles fell two million barrels last week, which was heavier than forecasts of a 900,000-barrel decline.
Distillates, which include diesel and heating fuel, dipped by 1.9 million barrels. Analysts had pencilled in a far lighter drop of 300,000 barrels.
Market sentiment was also dampened by news that US businesses added a meagre 119,000 jobs in April, payrolls firm ADP reported Wednesday, lending credence to fears that the labour market has hit a soft patch. Expectations had been for a rise of around 170,000.
The figures are seen as a harbinger of official unemployment and job-growth statistics, which will be released on Friday.
Traders meanwhile remain wary over the extremely fragile state of the eurozone economy, analysts said.
Eurozone unemployment spiked to a record 10.9 percent in March, official data showed Wednesday, piling pressure on governments to shift from austerity-first to growth policies so as to revive the economy.
The figures, up from 10.8 percent in February, coincided with a survey showing manufacturing in the 17-nation eurozone stumbling to near three-year low levels as spending cuts and tax rises push the bloc towards recession.
The Markit Purchasing Managers' Index, a closely watched indicator, fell sharply to 45.9 from 47.7 in March, signalling contraction of the manufacturing sector for a ninth month running.
The oil market also fell on Wednesday as traders took profits following bumper gains the previous day.
Crude prices had surged in New York on Tuesday, winning support from stronger-than-expected industrial data in the US and China, the world's top energy consumers.
Copyright AFP (Agence France-Presse), 2012