Crude oil plummets

US crude oil prices fell sharply on Thursday as investors focused on booking year-end profits after the recent jump by oil to above $91 a barrel, shrugging off supportive economic data and a government report showing crude oil inventories fell last week.
Oil prices briefly pared losses when the government said that US crude oil stockpiles fell 1.26 million barrels last week, less than expected but contrary to the industry report late Wednesday showing a crude stocks build. Oil prices fell despite news that initial claims for jobless aid in the United States fell to their lowest level in more than two years last week and Midwest factory activity grew in December at its fast pace since 1988. Another report showed pending sales of previously owned homes rose more than expected in November.
Analysts noted that, in addition to the incentive to book profits at year's end, the positive economic data might cause the US Federal Reserve to curb its recent initiatives to spur economic recovery, which could strengthen the dollar and limit price boosts for dollar-denominated commodities.
US crude oil for February delivery fell $1.93, or 2.12 percent, to $89.19 a barrel at 1:25 p.m. EST (1825 GMT). Prices traded range bound near $91 a barrel after touching a 26-month high of $91.88 a barrel on Monday. "While the weekly (unemployment) claims number is supportive on its face, a continuation of that level or lower would allow the Fed to curtail further quantitative easing plans for 2011, bolstering the dollar and keeping a lid on commodity prices," said John Kilduff, a partner at Again Capital LLC in New York.
Total US crude futures trading volume has been thin during the holiday week and was above 294,000 lots after midday in New York, compared with the 30-day average of 576,181. In London, ICE Brent crude for February fell $1.55 to $92.59 a barrel. "The market environment is still very solid but you will see a bit of taking off risk before year end," Barclays analyst Amrita Sen said.
US crude stocks eased by 1.26 million barrels to 339.43 million barrels in the week to Dec. 24, the Energy Information Administration said on Thursday, less than the drop of 2.6 million barrels analysts had expected. Crude inventories fell for a fourth straight week, according to EIA data, as companies allowed stocks to slide for end-year accounting purposes.
The EIA's data contradicted an industry report from the American Petroleum Institute on Wednesday that showed crude supply rose last week by 3.1 million barrels. Crude stocks at the delivery hub for the US crude contract at Cushing, Oklahoma, rose 245,000 barrels to 36.64 million as of Dec. 24, the EIA said. Cushing inventories fell 117,946 barrels to 40.025 million barrels in the week to Dec. 28, according to industry tracker Genscape's data released on Thursday.
Gasoline stocks fell by 2.32 million barrels, the EIA said on Thursday, after analysts had forecast a 1.4-million-barrel rise. Distillate inventories, which include heating oil and diesel fuel, rose 243,000 barrels, against analysts' expectations for a 600,000-barrel draw.
With crude stocks slipping four straight weeks and prices jumping above $90 a barrel, Opec output has risen only slightly in December as Nigerian supply increased, a Reuters survey found on Thursday. Supply from the 11 Opec members with output targets has averaged 26.75 million barrels per day this month, up from 26.70 million bpd in November, according to the survey of oil companies, Opec officials and analysts.