Oil prices slide on inventory build up

24 September 2009

Oil prices plummeted to less than $69 (€46.81) a barrel on Wednesday as concern about future energy demand continued to take its toll on the market.

US crude for November delivery settled at $68.97 a barrel - down $2.79, or nearly four per cent, on the previous day. London Brent crude fell $2.54 to close at $67.99.

The losses came on the back of a report by the US Energy Information Administration showing a 2.8-million barrel increase in stockpiles during the week to September 18th.

This went against many analysts' predictions that inventories would subside by 1.5 million barrels, stirring concerns about the strength of fuel demand in the country.

Phil Flynn, analyst at PFG Best Research in Chicago, told Reuters the report was indicative of "the real state of the economy", where demand for refined products, including home heating oil, remains very weak.

As a result, supplies are still high, he added, meaning prices are unlikely to experience any major upward movement unless there is an improvement in market fundamentals.

Oil suffered further losses in early morning trading on Thursday, as US crude fell 63 cents to $68.34 by 05:12 GMT, while London Brent crude lost 55 cents to stand at $67.44.

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