Wednesday May 7, 04:36 PM
Oil falls as rising U.S. crude inventories put brake on record rally UPDATE
(Updates prices, adds details)
LONDON (Thomson Financial) - Oil prices fell from near record levels after U.S. energy stocks rose above expectations last week, briefly placing a brake on a recent rally that took oil to a record $122.73
yesterday.
Crude oil inventories in the world's top energy consumer rose by 5.7 million barrels in the week to May 2, much more than the expected 1.9 million barrel rise, according to data released by the U.S. Energy Information Administration.
Gasoline stocks also rose above expectations by 800,000 barrels, against market expectations for a fall of 200,000 barrels, while distillate stocks -- which include heating oil -- decreased by 100,000 barrels, against predictions for a 1.3 million barrels gain.
'The builds in crude and gasoline should carry the day, sending the overall market lower,' said Citigroup (NYSE: C - news) analyst Tim Evans.
Before the report was released, prices had been steady near yesterday's record on nervousness ahead of the data, supply concerns from Nigeria and Iran, and as bullish Goldman Sachs (NYSE: GS - news) oil price forecast, for $200 within two years, sparked buying.
'The $12 crude price pop of the past three and a half sessions suggests an overcooked market and a lower close today,' said James Ritterbusch, head of Ritterbusch and associates.
At 4:08 p.m., New York-traded West Texas Intermediate crude for June delivery was down 4 cents to $121.80 a barrel, having yesterday hit a record high of $122.73 a barrel.
In London, Brent crude for June delivery was up 28 cents at $120.59, having yesterday touched an all-time record of $120.99.
Elsewhere, the dollar's next move is likely to have an impact on the price for most commodities. Commodities tend to move counter to the dollar as they are seen as alternative assets.
Investors are waiting for more economic data from the United States to solidify their views on what will be the Federal Reserve's next move -- whether it will keep its key interest rates on hold for a while or continue its monetary easing.
The dollar remained near a one-month high Wednesday against the euro and scaled a two-month peak against the pound even as U.S. housing data continued to disappoint.
A 1.0 percent fall in pending home sales in March for a massive 20.1 percent yearly decline was simply more confirmation the property market has further to fall.
However, a string of weak data in both the euro zone and UK have attracted the most attention, allowing the greenback to keep rallying.
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