Oil prices slip, despite sharp drop in US inventories

29-Dec-06

Oil prices have slipped in Asian trade, despite a sharp drop in US crude stockpiles. New York's main contract, light sweet crude for delivery in February, dipped to US$60.33 a barrel from US$60.53 in late US trades, and Brent North Sea crude for February declined 18 cents. The Department of Energy (DoE) report says that crude oil stockpiles slid much steeper than expected 8.1 million barrels to 321 million in the week ended December 22. Much of the drop in US crude inventories was due to shipping problems. Levels of heating oil, diesel fuel and other distillate products increased 500,000 barrels to 133.6 million over the week, in line with most forecasts. It seems that the US crude oil inventory levels are ceasing to have an effect as a supporting factor for pricing. The market seems to be more affected by the warmer winter weather in Europe and the United States. Markets are expected to continue the downward slide next year, pulling back from record highs above US$78 reached in July this year. Those levels are unlikely to be seen again for years to come.