Oil pump
Oil prices dipped below US$100 a barrel Wednesday as a surprise increase in United States gasolene supplies and a bigger-than-expected jump in crude stocks offered more evidence that a rough economy is forcing Americans to drive less.
Light, sweet crude for November delivery fell 72 cents to US$99.92 a barrel in afternoon trading on the New York Mercantile Exchange.
Prices traded erratically, however, rising as high as US$102.84 overnight and falling to as low as US$95.95.
In London, November Brent crude fell US$1.82 to US$96.35 a barrel on the ICE Futures exchange.
Crude prices have gyrated in recent days as investors wait to see if lawmakers will approve a US$700 billion financial bailout plan.
Second largest decline
On Tuesday, prices rose US$4.27 to settle at US$100.64 a barrel, recovering from a US$10.52 drop the previous day - the second largest one-day dollar decline ever.
Wednesday's losses were tied to data showing more robust US fuel supplies.
The Energy Department's Energy Information Administration said in its weekly report that crude stocks rose by 4.3 million barrels, or 1.5 per cent, to 294.5 million barrels for the week ending September 26.
Analysts had expected stocks to rise or fall of 1.5 million barrels, according to a survey by energy research firm Platts.
At the same time, gasolene inventories rose by 900,000 barrels, or 0.5 per cent, to 179.6 million barrels.
Analysts expected stockpiles of the motor fuel to fall in the range of one million to three million barrels.
Supply increases
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois, said the supply increases show that Gulf Coast energy infrastructure is steadily resuming operations after shutdowns caused by hurricanes Ike and Gustav - but also that US consumers and businesses aren't in a position to resume their old fuel-guzzling habits.
"It reinforces the weak demand argument that's been weighing on the markets," Ritterbusch said. "At the same time, we're seeing very strong recovery in production of both crude oil and products in the aftermath of the hurricanes."
- AP
