Oil prices fall by US$1.90

08-Jun-06

Oil prices fell by almost $2 a barrel on Wednesday after U.S. government data showed rising domestic inventories of crude-oil and gasoline. Light sweet crude for July delivery fell by US$1.90 to US$70.60 a barrel on the New York Mercantile Exchange. July Brent crude futures on London's ICE Futures exchange fell to US$70.38 a barrel. In its weekly petroleum report, the Energy Department said U.S. crude-oil stocks grew last week by 1.1 million barrels to 346.6 million barrels (4% above year ago levels). Gasoline inventories grew by 1 million barrels to 210.3 million barrels, (2.5% below year ago levels). Earlier in the day former Federal Reserve Chairman had expressed that while the country has been able to absorb sharp increases in oil prices, the high energy costs are beginning to stunt economic growth. However, the price of oil has not produced any "serious erosion" of world economic activity. On a week-to-week basis, the agency's report showed a slight decline in refinery output and gasoline demand. Over the past four weeks gasoline demand is 0.7 percent higher than it was during the same period a year ago.