US crude futures plunge $5.95 on inventory data

07 January 2009 21:30  [Source: ICIS news]

HOUSTON (ICIS news)--NYMEX light sweet crude futures for February delivery settled at $42.63/bbl on Wednesday, down $5.95 from Tuesday’s close on strong supply statistics from the US Energy Information Administration (EIA).

The administration reported a much larger build in crude and refined products inventories than had been expected.

The inventory builds offset what otherwise might have been upward pricing pressure from the ongoing conflict between Israel and Hamas in Gaza and the natural gas dispute between Russia and Ukraine.

In addition to the inventory build, downward pressure was seen in a sharp fall in US stock markets in response to reports of increasing job losses, suggesting that the recession may deepen.

Crude prices topped out overnight at $49.09/bbl but plunged to $42.41/bbl before rebounding slightly.

The front month had rallied to a session high of $50.47/bbl during the previous session in response to the Gaza and Ukraine situations and sentiment that OPEC’s decision to cut oil production was sticking but the market was showing signs of being overbought.

ICE Brent for February delivery performed better than its American counterpart but was just as volatile, topping out at $51.40/bbl and plunging to $45.67/bbl before settling at $45.86/bbl, down $4.67.

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By: Ignacio Sotolongo
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