Oil resumes slide, falling $2 after second big U.S. stock build
By Sam N. Adams
NEW YORK (Reuters) - Oil prices resumed their deep downward march on Wednesday, with U.S. crude again nearing $80 a barrel after data showing a second big jump in weekly U.S. crude stockpiles broke a brief period of tentative consolidation.
After a day of mostly choppy back-and-forth trade, prices tumbled steadily throughout the afternoon as dealers absorbed data showing a much quicker than expected rise in U.S. inventories and still-tame consumption. The rising U.S. dollar and falling equity markets added pressure.
After trading in a relatively narrower range for the past few days, Brent crude fell $1.68 at $84.56 a barrel at 2:37 EST (1824 GMT). Its Oct. 16 low of $82.60 was its weakest since 2010.
U.S. crude fell $1.97 or 2.5 percent to settle at $80.52, having touched a low of $80.28 a barrel. That followed three days in which prices barely budged.
The Energy Information Administration said U.S. crude inventories rose by 7.11 million barrels, more than the 2.7 million-barrel increase analysts had expected.
"The large crude oil build is the dominant feature of the report, making it bearish overall," said John Kilduff, partner at Again Capital LLC in New York.
Brent has tumbled from $115 in June on abundant supply, OPEC's reluctance to curb output and concerns that slowing economic growth in Europe and China would dent oil demand.
Some traders have suggested that prices may be bottoming out due to growing expectations that a price near $80 a barrel could slow growth in production from the booming U.S. shale oil patch or Canada's costly oil sands reserves.
Others remain anxious about the downside.
"The market is going to push $80 again because they want to test OPEC into cutting production," said Andrew Lipow of Lipow Oil Associates. "Other countries in the region require higher prices in order to sustain their spending, but lower oil prices just make the neighborhoods that Saudis and Kuwaitis live in that much more difficult."
OPEC countries have not yet indicated that the organization would limit oil production to drive prices back up. Nigeria is basing its 2015 budget on an assumed pirce of $78 per barrel, up from $77.50 in 2014, Reuters reported today.
(Additional reporting by Robert Gibbons and Jane Xie; editing by William Hardy, Jane Baird, David Gregorio and Andrew Hay)
