Crude Oil futures prices slumped below $102 a barrel Thursday after news that U.S. oil inventories rose last week amid weak demand.
The Energy Information Administration said crude oil stocks rose 2.2 million barrels in the week ended Dec. 30, while analysts expected a drop of 900,000 barrels. Gasoline stocks rose 2.479 million barrels, more than twice the size of the expected 1.1 million barrel rise and distillate stocks (diesel/heating oil) rose 3.224 million barrels, more than five times the projected rise.
The stock builds came as demand slumped. Use of gasoline, the most widely used petroleum product, fell 4.1% in the holiday week to a two-month low of 8.556 million barrels a day and was 3.4% below a year ago.
Total Oil demand fell 2.6%, to a five-week low near 18 million barrels a day and was down more than 1 million barrels a day from a year ago. Demand for distillate fuel (diesel and heating oil) was 7.3% lower in the week and 5.5% below a year ago.
The EIA said crude and gasoline stocks ended the year in the upper end of their five-year average level, while distillates were in the middle of the five-year range.
U.S. Crude Oil prices had gained 4.4% in the first two trading days of 2012, largely on concerns about the potential for a disruption in oil supplies from Iran or even the broader Gulf region. Iran had threatened to block oil flows from the key Strait of Hormuz, through which 20% of the world’s oil consumption flows, as the U.S. and European governments moved to tighten sanctions on Iran over its nuclear intentions. On Thursday, an Iranian official said his nation could withstand deeper sanctions, including a potential Oil embargo, and called for a resumption in Europe of talks on the nuclear issue that were halted a year ago.
Light, sweet Crude Oil futures for February delivery on the New York Mercantile Exchange fell to a low of $101.95 a barrel after the EIA data. The contract was down 59 cents at $102.63 a barrel recently. ICE North Sea Brent crude for February was 22 cents lower at $113.48 a barrel.
EasyForexNews Research Team