Oil Drops on US Inventories Budget Fight

Oil Drops on US Inventories, Budget Fight

Gene McGillian, a broker and analyst at Tradition Energy, said this week's build in crude oil supplies comes on the heels of a similar increase last week. "The U.S. production level continues to run at a really robust rate and we have ample supply on oil," he said.

NEW YORK -- Oil prices fell sharply today after a weekly government report on U.S. oil inventories showed a surprising build in stocks and the U.S. budget impasse dragged on.

U.S. benchmark West Texas Intermediate for November delivery fell $1.88 to $101.61 a barrel on the New York Mercantile Exchange, the lowest close since early July.

European oil benchmark Brent fell $1.10 to settle at $109.06 in London trade.

U.S. oil stocks rose by 6.8 million barrels for the week ending October 4, well above the 1.4 million barrel increase forecast by analysts in a Dow Jones Newswires survey.

The week also saw a big drop in refinery use, with U.S. plants processing at just 86% of capacity, down from 89% the prior week.

Similar Supply Build Last Week

Gene McGillian, a broker and analyst at Tradition Energy, said this week's build in crude oil supplies comes on the heels of a similar increase last week.

"The U.S. production level continues to run at a really robust rate and we have ample supply on oil," McGillian said.

Global markets remain jittery over the inability of Washington leaders to agree on a budget compromise that has kept the government partially shut down for the ninth consecutive day.

On Wednesday, President Barack Obama announced plans to invite all Republican and Democratic lawmakers to the White House to try to work through the conflict.

"The demand outlook continues to remain weak with the continuing government shutdown in the U.S. seemingly no nearer to resolution," said analyst Joe Conlan at British consultancy Inenco.

Copyright Agence France-Presse, 2013

TAGS: Energy
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