07 August 2008; economictimes.indiatimes.com: LONDON: Oil prices fell to a new three-month low near $117 a barrel on Wednesday after government data showed bigger-than-expected increases in crude and distillate stocks in the US last week, the world’s top oil consumer.
US light crude for September delivery was $1.69 down at $117.48 a barrel by 21:35 pm IST, off highs of $120.49 hit earlier in the session. London Brent crude was down $1.66 at $116.04 a barrel.
The US Energy Information Administration (EIA) said crude oil stocks in the world’s biggest energy user rose by 1.7 million barrels last week, against expectations of an increase of 300,000 barrels. Gasoline inventories fell by 4.4 million barrels compared with forecasts of a 1.2 million barrels drop, while stocks of distillate fuels, which include heating oil and diesel, rose by 2.8 million barrels, 700,000 barrels more than expected.
“It’s mixed data — it’s bearish for distillates, bearish for crude oil and bullish for gasoline. One key question is how much we’re going to make out of the draw in gasoline when we only have one month left in the driving season,” said Tim Evans, energy analyst at Citi Futures Perspective.
Oil earlier bounced off near three-month lows after an explosion on the Baku-Tbilisi-Ceyhan oil pipeline in eastern Turkey late on Tuesday halted oil flows along the key pipeline, providing a bullish backdrop.
Oil has fallen almost $30 from its mid-July peak of $147.27 a barrel —a drop of nearly 20% — amid growing evidence that high prices have finally started to take a toll on demand.
“The next support area is $117. If we break through $117 we are probably not going to be able to create any upward momentum in the market,” said Rob Kurzatkowski, futures analyst at optionsXpress in Chicago.
Traders kept a watchful eye on news about Opec member Iran, the world’s fourth biggest oil producer, which remains locked in a tense stand-off with the West, notably the US, over its nuclear programme. Iran says it is only seeking to master nuclear technology to generate electricity and has repeatedly refused to halt its atomic work, prompting the UN Security Council to impose three rounds of penalties on Tehran since 2006.
The US State Department said major powers had agreed on Wednesday to consider more UN sanctions against Iran after Tehran gave no concrete reply to their demand that it freeze its nuclear activities.
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