US crude futures dropped more than half a per cent to below $79 a barrel today, extending the previous session's losses away from a 1-year peak after a bigger-than-expected rise in S crude oil inventories.
NYMEX crude for the new front month December fell 30 cents to $78.82 a barrel, after the American Petroleum Institute said late yesterday that crude stocks rose 3.8 million barrels.
Yesterday, the November contract hit $80.05, a 12-month high for the front month on a continuation basis. Brent crude lost 22 cents to $77.02.
The Energy Information Administration, a US government agency, will issue its own report later today.
The persistent weakness in the US dollar, global strength in equities, absence of overhead resistance, powerful momentum and mounting evidence of real economic recovery pointed to a bullish outlook for crude, he said in a research note.
That view was echoed by BP's chief economist, who also saw strong prices over the coming months, driven by expectations of growing demand and a relatively high level of OPEC output discipline.
In the short term, sentiment was also knocked by a steadier tone to the dollar, which retreated from 14-month lows and weakness in US equity markets, both of which have been key drivers in lifting oil by 11 per cent so far in October.
Reuters