CRUDE oil prices fell yesterday after a US government report showed a big increase in crude stocks and a big drop in demand, providing evidence that economic weakness is eroding fuel consumption in the world's biggest consumer of petroleum products.
CRUDE oil prices fell yesterday after a US government report showed a big increase in crude stocks and a big drop in demand, providing evidence that economic weakness is eroding fuel consumption in the world's biggest consumer of petroleum products.
Dealers in London and New York said trading was volatile. Prices had earlier fallen by more than $4 to a 10-month low and then briefly rose into positive territory after news of a wave of central bank interest rate cuts aimed at shoring up the global economy, which is mired in the worst financial crisis since the 1930s.
US light crude for November delivery ended down $1.11 at $88.95 a barrel after dipping to $86.05, the lowest level since December 6, 2007. London-traded North Sea Brent crude slipped 30 cents to $84.36.
Data from the Energy Information Administration showed US crude stocks had risen by 8.1 million barrels as inventories recovered from storm disruptions, much more than the 2.3 million barrels forecast by analysts.
It also showed petrol stocks had risen by 7.2 million barrels, compared with forecasts for a 1.1 million rise, while total demand for products over the past four weeks was down by 8.6% compared with a year before.
"There is still a lot of demand concerns in the global economy, and that's going to continue translating into a struggling energy market," said Tom Bentz, an analyst at BNP Paribas Commodity Futures.
Paolo Scaroni, chief executive of the Italian oil company Eni, said crude prices could fall further as signs pointed to dropping demand.
This view was not shared by Christophe de Margerie, the head of France's biggest oil company, Total. He said that because of continuing supply constraints, crude prices could rebound after the current crisis in world economies.
"Supply remains extraordinarily limited, complex to develop, very expensive, with greater and greater geopolitical and technical issues at stake," De Margerie told a conference in south-eastern France.
"Today, we cannot manage to increase production by much. Happily, demand is weaker but if we return to a world that is not in crisis, with emerging countries that hope to develop - and that is in our interest - we will fall back into the same system we had a few months ago," he said.
