By Neil Dennis
Oil prices were down again on Thursday after a surprisingly large build up in US crude stockpiles announced by the government’s Energy Information Administration on Wednesday.
The EIA numbers showed an inventory gain of 200,000 barrels of crude, nowhere near the 4.3m barrels reported by the American Petroleum Institute on Tuesday, but the market had expected the EIA data to show a drop in crude stockpiles.
Crude prices have fallen 3.4 per cent since the API figures were released on Tuesday, in spite of some encouraging economic numbers, as new home sales and durable goods data both indicated increasing demand.
Edward Meir, strategist at MF Global said the market reaction was not surprising given the recent weeks of steady gains.
”These corrections are both normal and healthy, and we could even see further weakness in energy before the current selling runs its course,” he said.
”However, the ’recovery trade’ still seems to be intact, and should reinvigorate the markets, particularly if US macro data continues to reflect the types of numbers that now seem to be surprising more consistently to the upside.”
By late morning in London, Nymex West Texas Intermediate for October delivery was down 23 cents to $71.20 a barrel, while October Brent lost 26 cents to $71.39 a barrel.