Crude oil falls despite inventory drop

2 July 2009

A drop in US crude inventories was not enough to prevent oil prices from falling back below $70 (£42.69) a barrel on Wednesday as doubts rose over the future of world fuel demand.

US crude for August delivery settled 58 cents lower at $69.31 a barrel, while London Brent crude dropped 51 cents to close at $68.79 a barrel.

Earlier, prices reached close to $72 a barrel after a report by the US Energy Information Administration revealed that crude stockpiles fell by more than 3.5 million barrels during the course of the past week.

However, the data also showed a 2.3 million barrel increase in gasoline inventories in the country, while distillate inventories rose by 2.9 million barrels.

This prompted renewed concerns among investors about the future of world fuel demand, forcing prices back down despite optimism in the stock markets.

The dip will no doubt come as welcome news for home heating oil customers, who saw crude values reach $71.76 a barrel this week after militant attacks on oil facilities in Nigeria threatened to put pressure on future supply.

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