Oil steady above $134 after drop on stock build


Posted at Jun 26 2008 10:18 AM | Updated as of Jun 26 2008 06:18 PM


PERTH - Oil held above $134 a barrel on Thursday, steadying after a drop of more than $2 the previous session after US government data showed a surprise increase in domestic crude stocks last week.

US light crude for August delivery fell 5 cents to $134.50 a barrel by 8:51 EDT. It settled down $2.45 at $134.55 a barrel on Wednesday.

London Brent crude fell 15 cents to $134.18.

"The surprise rise in US crude stocks has pointed to a weakening demand outlook in the US," said Gerard Burg, a commodities analyst at National Australia Bank in Melbourne.

"The market will focus on the US economic data due later today to get a clearer picture of the economy and its impact on oil demand."

US economic indicators due on Thursday include final gross domestic product for the first quarter and initial claims for jobless benefits, both due at 8:30 a.m. EDT.

Surging oil prices, up nearly 40 percent this year to a record near $140 a barrel, have weighed on the economies of consuming nations.

Many Asian countries, including China, have moved to cut fuel subsidies, prompting worries of a sharp slowdown in oil demand.

US crude oil inventories rose for the first time in six weeks, by 800,000 barrels to 301.8 million barrels, in the week to June 20, the Energy Information Administration reported, countering expectations of a drop.

The build came as US gasoline demand, which has fallen as high fuel prices forced motorists to adjust their driving habits, dipped 2.1 percent over the past four weeks compared with year-ago levels.

On the supply side, US oil major Chevron Corp. delayed some exports of Escravos crude oil in Nigeria after armed youths blew up a supply pipeline last week.

Analysts said instability in Nigeria and simmering tensions between Israel and Iran over Tehran's nuclear program would continue to offer support to oil prices.