Thursday August 20, 11:02 AM
Oil prices dip after surge higher
LONDON (AFP) - Oil prices fell Thursday on sluggish demand concerns, after surging a day earlier on official data showing falls in US energy (USEG - news) inventories, traders said.
New York's main futures contract, light sweet crude for delivery in September, dropped 13 cents to 72.29 dollars a barrel. The September contract expires at the close of trade on Thursday.
Brent North Sea crude for October delivery slipped 39 cents to 74.20 dollars in morning London trade.
Oil prices had spiked higher Wednesday, closing up more than three dollars in New York, on news of tumbling US crude inventories, traders said.
The US Department of Energy (DoE) on Wednesday said that American inventories of crude fell a massive 8.4 million barrels last week, snapping a three-week run of gains.
That took traders completely by surprise, with the market having expected an increase of 1.5 million barrels.
The DoE also said that gasoline (petrol) reserves sank 2.1 million barrels, much more than forecasts of an 800,000-barrel decline.
Distillates, which include diesel and heating fuel, fell 700,000 barrels last week whereas analysts had penciled in a gain of 500,000 barrels.
VTB Capital analyst Andrey Kryuchenkov said that while the latest US report helped oil prices to recover towards August's highs on Wednesday, "it does not constitute a new trend, while more stock draws are needed to cement a demand recovery."
Despite falling last week, US distillate stocks remain at 27-year highs.
"Distillate stocks are still extremely bloated," said Jason Feer, Asia Pacific general manager of energy market analysts Argus Media.
He added on Thursday that high levels of distillate stocks indicated "economic growth is still quite sluggish."
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