New York crude futures tumbled by nearly 3 per cent, dipping as low as $70.44.
Brimming US fuel stocks drive crude lower
Crude has fallen to its lowest level in two months, due to brimming US fuel stockpiles. Following the US government release yesterday of its latest weekly figures on the oil inventories held by the world's biggest energy consumer, New York crude futures tumbled by nearly 3 per cent, dipping as low as $70.44. Crude's slide followed a similar decline in the January futures contract for heating oil on the New York Mercantile Exchange. On a day when a massive winter storm swept across the central US, killing at least 17 people and stranding motorists as snow drifts shut down major roads, the furnace fuel dropped to a two-month low of $1.9093 per gallon.
Hope was fading for any recovery in heating oil futures this winter, Carl Larry, the president of the Houston consultancy Oil Outlooks and Opinions, told Dow Jones. "About the only thing that everyone holding length can hope for is hell freezing over," he said. The US energy department said diesel and heating oil inventories rose by an unexpectedly large 1.6 million barrels in the week ended December 4, and were 22 per cent higher than a year earlier. Petrol stockpiles swelled by 2.2 million barrels, which was also above most analysts' predictions.
"The size of the product build was surprising and somewhat bearish and that is weighing on crude right now," said Stephen Schork, the editor of the Schork Report, a Villanova, Pennsylvania, energy markets newsletter. The recession has cut deeply into US demand for transportation fuel, especially diesel, which powers lorries and trains. email@example.com