Monday, October 18, 2010

Oil Falls From Two Week High as U.S. Production Drops, Stockpiles Increase

Oil dropped from its highest in almost two weeks as analysts forecast U.S. crude stockpiles swelled to the largest since June amid refinery maintenance and that fuel demand has slowed. Futures retraced some of yesterday’s 2.3 percent gain on expectations that crude inventories climbed 1.5 million barrels last week, according to analyst estimates before an Energy Department report tomorrow. U.S. industrial production fell for the first time since the recession ended in June 2009, according to Federal Reserve figures. Economists had forecast an increase.

“The fundamentals haven’t really improved by a great deal,” said Serene Lim, a commodity analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “Inventories have been on the high range of the five year average so there are substantial supplies.” The November contract lost as much as 42 cents, or 0.5 percent, to $82.66 a barrel in electronic trading on the New York Mercantile Exchange, and was at $82.71 at 12:05 p.m. Singapore time. Yesterday it increased to $83.08, the highest settlement since Oct. 6. Prices are up 4.5 percent this year.

The more actively traded December contract slipped as much as 43 cents, or 0.5 percent, to $83.37. “We’re probably seeing a bit of profit taking today with $83 being a strong resistance level,” said Lim at Australia & New Zealand Banking Group. November oil surged yesterday to as much as $83.28 a barrel after a strike in France curbed fuel supplies. French truckers blocked highways and officials said they would use police to prevent strikers from cutting the delivery of fuel as the standoff hardened over President Nicolas Sarkozy’s plans to raise the retirement age to 62.....Read the entire article.


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