Oil prices resumed their deep downward march on Wednesday, with US crude again nearing $80 a barrel after data showing a second big jump in weekly US crude stockpiles broke a brief period of tentative consolidation. After a day of mostly choppy back-and-forth trade, prices tumbled steadily throughout the afternoon as dealers absorbed data showing a much quicker than expected rise in US inventories and still-tame consumption.
-- Some fear price slide may slow North America oil boom
The rising US dollar and falling equity markets added pressure. After trading in a relatively narrower range for the past few days, Brent crude fell $1.68 at $84.56 a barrel at 2:37 EST (1824 GMT). Its October 16 low of $82.60 was its weakest since 2010.
US crude fell $1.97 or 2.5 percent to settle at $80.52, having touched a low of $80.28 a barrel. That followed three days in which prices barely budged. The Energy Information Administration said US crude inventories rose by 7.11 million barrels, more than the 2.7 million-barrel increase analysts had expected.
"The large crude oil build is the dominant feature of the report, making it bearish overall," said John Kilduff, partner at Again Capital LLC in New York. Brent has tumbled from $115 in June on abundant supply, OPEC's reluctance to curb output and concerns that slowing economic growth in Europe and China would dent oil demand.
Some traders have suggested that prices may be bottoming out due to growing expectations that a price near $80 a barrel could slow growth in production from the booming US shale oil patch or Canada's costly oil sands reserves. Others remain anxious about the downside. "The market is going to push $80 again because they want to test OPEC into cutting production," said Andrew Lipow of Lipow Oil Associates. "Other countries in the region require higher prices in order to sustain their spending, but lower oil prices just make the neighbourhoods that Saudis and Kuwaitis live in that much more difficult." OPEC countries have not yet indicated that the organisation would limit oil production to drive prices back up. Nigeria is basing its 2015 budget on an assumed price of $78 per barrel, up from $77.50 in 2014, Reuters reported today.
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