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LONDON — Oil prices slumped to 63 dollars on Wednesday as traders digested a surprise jump in crude stockpiles in the United States, which is the world's biggest energy consuming nation.
New York's main contract, light sweet crude for September, nosedived 3.93 dollars per barrel to 63.30 dollars after earlier touching a low of 63.04.
London's Brent North Sea crude for September delivery sank 3.24 dollars to 66.64 dollars a barrel, having earlier hit 66.40.
The US government's Department of Energy (DoE) said Wednesday that American crude stocks surged 5.1 million barrels in the week ending July 24, snapping seven successive weekly falls.
That confounded market expectations for a 1.2-million-barrel drop, according to analysts polled by Dow Jones Newswires, and indicated that crude demand was weak in the recession-mired United States.
The DoE added gasoline (petrol) reserves fell 2.3 million barrels, which was far greater than expectations for a 100,000-barrel decline.
Prices were also dragged lower by official data showing that new orders for US manufactured durable goods fell 2.5 percent in June after two months of increases, amid weakness in defense and aircraft purchases.
Orders dropped 4.1 billion dollars from May to 158.6 billion dollars, the Commerce Department reported.
The slump was steeper than the 0.6 percent decline expected and followed a 1.3 percent rise in orders in May and a 1.4 percent rise in April.
The oil market was also dampened by the falling Chinese stock market, analysts said. China is the world's second biggest energy consumer after the United States.
Chinese shares slumped 5.00 percent on Wednesday as investors collected profits across the market after recent gains, with property developers leading the fall, dealers said.
"Crude futures are lower after a sharp fall in Chinese equities," said Sucden analyst Nimit Khamar.
"The largest fall in eight months sapped risk appetite and sparked concerns over the sustainability of markets at current levels, especially oil markets."
Oil prices had already fallen on Tuesday after a Conference Board report showed that US consumer confidence fell for a second straight month in July on worries about the job market.
The business research firm said its confidence index fell to 46.6 from 49.3 in June, which came after an eight-month peak of 54.8 in May. The July figure was weaker than analyst expectations of 49.0.
"Never underestimate the sentiment of the US consumer," said analyst Tamas Varga at PVM Oil Associates.
"There are more than 300 million of them and they are the most affluent in the world, so when their mood sours, markets are bound to take a beating."
Copyright © 2009 AFP
