LONDON (AFP) – World oil prices have dived beneath 53 dollars per barrel after the US government had revealed a sharp weekly increase in stocks of distillates, including heating fuel.
London’s Brent North Sea crude for February delivery sank to 52.60 dollars per barrel in electronic trading on Thursday — a low which was last witnessed on June 13, 2005. The contract later stood at 53.28 dollars, down 41 cents from Wednesday’s close.
New York’s main oil futures contract, light sweet crude for delivery in February, tumbled to 52.94 dollars per barrel in electronic deals before the start of official trading. That also marked the lowest point since June 2005.
The New York contract later pulled back to 53.50 dollars per barrel, down 52 cents from Wednesday.
The US Department of Energy had said on Wednesday that stockpiles of distillates and gasoline (petrol) rose sharply last week, offsetting a bigger-than-expected drop in crude oil inventories.
“The data was relatively bearish with some pretty big builds in products — gasoline and distillates — and we’ve got ongoing very mild weather,” said Barclays Capital analyst Kevin Norrish.
“Overall we do not think the downwards move is justified, but with the very mild weather not just in the United States but right through the northern hemisphere, there is the potential for further price losses.
“The big number is 50 now, and given the momentum the market cannot rule out a test at that level.”
The DoE had said on Wednesday that US crude oil reserves dropped five million barrels to 314.7 million in the week ended January 5. Most oil traders were expecting crude inventories to have dropped by just 1.5 million barrels.
Inventories of distillate products, such as heating oil and diesel fuel, increased 5.4 million barrels to 141 million over the week, much more than the predicted rise of 2.0 million barrels.