Oil prices drop on big US supply increase
Tokyo: Oil prices Wednesday declined after a US oil inventory report showed a surprisingly large build in crude supplies.
US benchmark West Texas Intermediate (WTI) for delivery in December fell USD 1.44 on the New York Mercantile Exchange to USD 96.86 a barrel, its lowest closing price since June 28.
European oil benchmark Brent oil for delivery in December fell USD 2.17 to USD 107.80 a barrel.
"The excess global supply of oil, combined with a weaker demand growth outlook, continues to weigh on prices," said markets analyst Fawad Razaqzada at traders GFT.
The US government`s Department of Energy weekly survey Wednesday showed that American crude reserves had soared by 5.2 million barrels in the week ending October 18.
That was more than triple market expectations for a gain of 1.7 million barrels of crude, according to analysts polled by Dow Jones Newswires.
The increase also came on the heels of a Monday report for the prior week, delayed by the partial US government shutdown, that showed another big rise in US inventories.
"A build is not uncommon this time of year, between refinery maintenance, the hurricane season being over and people are not really driving much," said Michael Lynch, an analyst at Strategic Energy & Economic Consulting.
Lynch also cited anxiety about the economy.
There is "a lot of nervousness among traders that we are going to see weaker economic growth until the end of the year," he said.
The WTI retreat has been accentuated by technical reasons. Since oil breached the USD 100 a barrel level Monday, the commodity has continued to fall due to automatic sales from some investors, said Robert Yawger of Mizuho Securities.