ECONOMY:: Oil Falls for Second Day as U.S. Inventories Rise Unexpectedly – Businessweek
By MB Snow at December 29, 2011 | 10:43 am | Print
Dec. 29 (Bloomberg) — Oil fell for a second day after a government report showed an unexpected increase in U.S. inventories as demand declined.
Prices dropped as much as 1.1 percent after the Energy Department said stockpiles rose 3.9 million barrels to 327.5 million in the week ended Dec. 23. Total products supplied, a measure of fuel demand, fell for the first time in four weeks.
“The build is a bearish number and should bring the price down,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “What’s going on is that everybody is selling commodities and buying equities.”
Crude oil for February delivery fell 80 cents, or 0.8 percent, to $98.56 at 11:42 a.m. on the New York Mercantile Exchange. Earlier, futures touched $98.30 a barrel. Prices have gained 7.9 percent this year.
Brent oil for February settlement slid 79 cents, or 0.7 percent, to $106.77 a barrel on the London-based ICE Futures Europe exchange.
Supplies were forecast to drop 2.5 million barrels, based on the median of 10 analyst estimates in a Bloomberg News survey. The American Petroleum Institute said late yesterday that crude supplies climbed 9.57 million barrels last week.
Total products supplied decreased 825,000 barrels a day to 18.5 million, the Energy Department reported.
Euro Weakens
Oil also fell as the euro weakened to the lowest level against the dollar since September 2010 after Italy auctioned 7.02 billion euros ($9 billion) of bonds, short of a target.
“All traders are looking at the same thing,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “They are looking at the euro-dollar connection and what equities are doing.”
The euro tumbled as much as 0.6 percent to $1.2858. A weaker euro and stronger dollar reduces oil’s appeal as an investment alternative.
The Standard & Poor’s 500 Index gained 0.6 percent. The Standard & Poor’s GSCI Index of 24 raw materials fell 0.7 percent.
via Oil Falls for Second Day as U.S. Inventories Rise Unexpectedly – Businessweek.