Oil prices dive after US energy report

Oil prices fell sharply in volatile trade on Thursday as traders reacted to a weekly US energy report that revealed a slump in crude oil inventories.

Prices had initially jumped higher in the wake of the report’s release, but values subsequently tumbled as some analysts questioned if energy demand was dropping amid sky-high prices.

New York’s main oil futures contract, light sweet crude for July delivery, lost a hefty US$4.41 to close down at US$126.62 per barrel, after spiking above US$133 following the release of the weekly stockpile snapshot.

In London, Brent North Sea crude for July delivery tumbled US$4.04 to settle lower at US$126.89.

The slide in prices comes after both contracts had struck historic peaks a week ago, with Brent hitting US$135.14 and New York prices reaching US$135.09 on tight supply fears.

Traders said prices may also have dropped on Thursday as some market speculators likely decided the time was ripe to engage in a bout of profit taking.

The price moves came after the US Department of Energy (DoE) reported that American crude reserves slumped 8.8 million barrels in the week ending May 23.

Gasoline or petrol stockpiles tumbled 3.2 million barrels. Market expectations had been for no change.

‘The first reaction was bullish, then we saw demand is down … so we wondered where is all the crude going,’ said Sucden analyst Robert Montefusco.

The DoE report was published one day later than usual due to a public holiday in the United States on Monday.

Hahaha! That is good news. Hope more benign news will follow in the coming weeks!

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