Crude oil prices drop on inventories

| October 18, 2006 | 0 Comments

Crude oil prices drop on inventories

Crude oil prices were lower on Wednesday after the US Energy Information Administration released new inventory figures for the week ending October 13. Crude oil stockpiles were up by 5.1 million barrels during the week, against an expected rise of only 1.3 million barrels. The build-up was a result of refineries cutting down on production in order to carry out scheduled autumn maintenance work. Capacity utilization at US refineries was down to 86.3 percent, from 89.2 percent the week before. It was unclear how OPEC would look at the figures and some analysts believe that the cartel could reduce production again before the end of the year, beyond the reduction expected later this week, if prices continue to decline.

Inventories of both gasoline and heating oil were lower on the week, with gasoline in storage down by 5.2 million barrels, well above the expected drop of 0.3 million barrels, and heating oil stockpiles down by 4.5 million barrels against an expected decline of 0.7 million barrels.

Brent crude December contracts were 27 cents lower to $60.67 per barrel, while West Texas Intermediate crude for November delivery dropped 10 cents to $58.83 per barrel on the New York Mercantile Exchange. Nymex November unleaded gasoline, however, was up almost 2 cents to $1.4800 per gallon and November heating oil added half a cent to $1.7387 per gallon.

In metals markets on Wednesday, prices for nickel and tin were both lower. Tin dropped 3 percent to $9,700 per tonne, while nickel fell 1.4 percent to $30,950 per tonne on predictions of a supply deficit over the next ten years. Copper, however, added 0.1 percent to $7,650 per tonne and aluminium gained 0.2 percent to $2,715.5 per tonne. Gold remained about the same, trading at $592.80 per troy ounce.

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