Oil prices slide as crude oil inventories rise in USA

02-Nov-06

Oil prices slid on Wednesday on release of report that crude oil inventories rose by 2 million barrels last week, while heating oil and gasoline inventories fell. Though the drop in product inventories were larger than anticipated, the market remained relatively unaffected, as the report indicates that refiners are boosting production and fuel demand is still going strong. Light sweet crude for December delivery settle two cents lower at US$58.71 a barrel on the New York Mercantile Exchange. Brent crude for December on London's ICE futures exchange settled 5 cents higher atUS$58.98 a barrel. Rise in crude oil stocks is largely due to a hike in imports by 599,000 bpd from the previous week. Inventories of distillates, which include heating oil and diesel fuel, fell by 2.7 million barrels to 141.3 million barrels. Gasoline inventories fell by 2.8 million barrels to 204.6 million barrels. Refineries operated at nearly 89% capacity, more than 2% higher than the previous week. Another factor exerting pressure on prices was this week's soft U.S. economic data which indicated that growth is at its slowest pace in three years. Soft economic data suggests demand could weaken.