Oil falls to below $90 amid mixed US supply report
Oil prices fell to below $90 a barrel Wednesday after a U.S. crude supply report showed mixed signs about consumer demand.
By early afternoon in Europe, benchmark oil for October delivery was down 64 cents to $89.57 in electronic trading on the New York Mercantile Exchange. Crude added $2.02 to settle at $90.21 on Tuesday.
In London, Brent crude for October delivery was up 40 cents at $112.29 on the ICE Futures exchange.
"Brent ... continued its upside momentum, tracking gains in the European equity markets, while (Nymex) crude oil has been under pressure ahead of the release of the weekly EIA oil inventories," said analysts at Sucden Financial Research, referring to the U.S. Energy Department's Energy Information Administration, which reports its weekly supply data later Wednesday.
The analysts said trading was showing "high volatility and tentative conditions."
Oil prices jumped Tuesday to the highest in a month, up from $76 on Aug. 9, despite investor concerns about Europe's debt crisis and slowing global economic growth. Some analysts expect prices will drift back down toward $80 if they can't break through the $90 level.
Prices were supported Tuesday when the American Petroleum Institute said crude inventories fell 5.1 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.9 million barrels. The large drop was likely due to disruptions of crude operations caused by Tropical Storm Lee, analysts said.
However, inventories of gasoline rose 2.8 million barrels last week while distillates increased 67,000 barrels, the API said.
Besides the European debt crisis, predictions of falling global demand by OPEC and the International Energy Agency, as well as some bullish supply factors, such as the expected recovery of Libya's oil exports, also weighed on the market.
In other Nymex trading for October contracts, heating oil rose 0.5 cent at $2.9411 per gallon and gasoline futures dropped 0.51 cent at $2.7373 per gallon. Natural gas for October delivery rose 0.1 cent to $3.981 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.