EIA report prompts price slump

29 November 2007

The price of crude oil slumped on Wednesday after a US government report revealed the country's stockpile had not dropped by as much as analysts expected.

Speculation about the output plans of the Organisation of Petroleum Exporting Countries (Opec) had already started a downward trend, but market commentators had expected the data contained in the Energy Information Administration's (EIA) weekly update to offer some support for prices.

However, it revealed only a 400,000 barrel drop in crude stocks and a 100,000 barrel fall in the stockpile of distillate, compared to the forecasted slides of one million and 1.2 million respectively.

As a result, US crude lost $3.80 to close at $90.62 (£43.86) and London Brent crude slipped $2.71 to settle at $89.81.

The EIA's report contained less positive news for heating oil customers in the US, revealing that prices hit a record high for the eighth consecutive week.

Domestic customers now have to pay an average of $3.29 a gallon, compared with $2.37 a year ago.