Oil drops below $128, extends decline on easing supply concerns

Oil drops below $128, extends decline on easing supply concerns
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First Published: Wed, Jul 23 2008. 11 18 AM IST
Updated: Wed, Jul 23 2008. 11 18 AM IST
AP
Singapore: Oil prices slipped further after tumbling more than $3 a barrel in the previous session as a hurricane looked likely to spare key oil installations in the US Gulf of Mexico.
Traders in Asia awaited the release of US oil supply data later in the day that was expected to show a rise in gasoline stocks amid weakening demand in the world’s largest energy consumer.
Light, sweet crude for September delivery fell 82 cents to $127.60 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell $3.40 to settle at $128.42 in the previous session.
The August contract fell $3.09 to settle at $127.95 a barrel as it expired at the end of floor trade. The overnight sell-off dragged oil prices to their lowest level since early June and was crude’s fifth decline in the last six sessions.
The drop offered further evidence that investors are now quickly pulling money out of the market, after driving prices to a record above US$147 only a week and a half ago. It was also a reminder that, with traders for the moment turning bearish, the absence of major news can push the market down just as incremental supply concerns previously drove prices sharply higher.
Crude oil inventories were expected to drop by 1.9 million barrels in the US. Energy Information Administration’s weekly petroleum supply report, according to the average of analysts’ estimates in a survey by energy research firm Platts.
The survey also showed that analysts projected gasoline stocks to rise by 500,000 barrels. “I suspect we’ll see another rise in gasoline stocks, highlighting again that demand is certainly weak,” Pervan said.
In other Nymex trading, heating oil futures lost 1.82 cents to $3.66 a gallon (3.8 litres) while gasoline prices dropped 0.74%t to $3.1396 a gallon. Natural gas prices added 0.7 cents to $10.074 per 1,000 cubic feet. September Brent crude fell 74 cents to $128.81 a barrel on the ICE Futures exchange in London.
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First Published: Wed, Jul 23 2008. 11 18 AM IST