Oil hovers below $83 after US crude supply jump

Wednesday, 6 October 2010 19:04 - - {{hitsCtrl.values.hits}}

SINGAPORE: Oil prices hovered below $83 a barrel Wednesday in Asia after a report showed U.S. crude supplies unexpectedly jumped last week, suggesting demand may be weaker than anticipated.

Benchmark oil for November delivery was down 14 cents to $82.68 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained $1.35 to settle at $82.82 on Tuesday.

The American Petroleum Institute said late Tuesday that crude inventories rose 4.4 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast a drop of 1.3 million barrels. Inventories of gasoline and distillates fell, the API said.

The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.

Oil prices broke out of a year-long $70 to $80 trading range last week as global stocks rallied and the U.S. dollar fell. Crude traders often look to stock markets as a measure of overall investor sentiment while oil becomes cheaper for investors with foreign currencies when the dollar drops.

“We look for the euro to be the primary price driver behind upcoming swings in the value of oil,” Ritterbusch and Associates said in a report. “Additional oil price gains would appear highly likely.”

In other Nymex trading in November contracts, heating oil was steady at $2.295 a gallon and gasoline held at $2.126 a gallon. Natural gas rose 3.7 cents to $3.78 per 1,000 cubic feet.

In London, Brent crude rose 3 cents to $84.87 a barrel on the ICE Futures exchange.