Oil tumbles below 80 dollars on debt worries, inventory

08:26, May 06, 2010      

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Oil prices tumbled below 80 U.S. dollars on Wednesday as European debt crisis and another buildup in the U.S. crude stockpiles weighed on the market.

Light, sweet crude for June delivery plunged 2.77 dollars to 79. 97 dollars a barrel on the New York Mercantile Exchange in late morning trading. Futures dropped to as low as 79.15 dollars a barrel during trading.

Worries that the sovereign debt crisis in Greece may spread to other euro zone countries continued to boost the dollar, which rose to a new one-year high against the euro. A strengthening green back usually limits market's appetite for riskier assets like energy commodities.

Meanwhile, the latest government data showed that U.S. commercial crude inventory rose by 2.8 million barrels last week, nearly double the 1.54 million barrels analysts estimated. Moreover, gasoline stocks increased by 1.2 million barrels, and distillates that include heating oil and diesel gained 600,000 barrels, both exceeding forecasts.

Oil inventories have risen for 13 of the last 14 weeks, signaling to traders that demand is still weak.

In London, Brent crude for June delivery fell 2.93 dollars to 82.74 dollars a barrel on the ICE Futures Exchange.



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