Oil tumbles on inventory increase, demand concern

08:07, August 12, 2010      

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Oil prices tumbled to settle below 80 U.S. dollars a barrel on Wednesday on increasing gasoline and distillate fuel stocks and concerns about weak global demand.

The U.S. Energy Department reported on Wednesday that gasoline inventory rose by 400,000 barrels to 223.4 million barrels last week, the highest level of the past year on August 6. Meanwhile, distillate fuels, which include diesel and heating oil, also increased by 3.5 million barrels. Investors largely ignored a larger-than-expected decrease in crude stockpiles.

In its latest monthly report released on Wednesday, the International Energy Agency (IEA) slightly boosted forecasts for global crude demand for 2010 and 2011. But it warned that the world energy consumption remained vulnerable to a weaker global economy.

Worries about a slowdown in recovery triggered a sharp fall in equity market, which also pressured on energy commodities by hitting the market sentiment.

Light, sweet crude for September delivery fell 2.23 dollars, or 2.8 percent, to settle at 78.02 dollars a barrel on the New York Mercantile Exchange.

Brent crude for September delivery fell 2.12 dollars to 77.48 dollars a barrel on the ICE Futures Exchange in London.



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