Crude oil futures slipped below $83/barrel today after Tuesday’s inventories data from the American Petroleum Institute (API) reported a huge gain in US crude stockpiles.
According to API, crude supplies in the US rose 6.4 million barrels, while Platts projected a significantly smaller increase of 1.5 million barrels.
Industry analysts polled by Bloomberg expect today’s inventories report from the US Energy Department to show gains of 1 million barrels and 625,000 barrels in crude oil and gasoline stockpiles respectively, signalling lower demand from the world's largest energy consumer.
Goldman Sachs (NYSE:GS) has recently said that oil prices will top US$100/barrel by the end of next year as demand will keep growing with support from the ongoing economic recovery.
Energy analysts at the investment bank also said that US crude oil imports will stay weak enough to lead to more drawdowns in US stockpiles, pushing the prices into its targeted trading range of US$85-95/barrel within the next few months.
In addition to the supplies data, oil and other commodities were under pressure from gains in the US dollar.
The American currency climbed after the Conference Board reported that its consumer confidence index improved from 48.6 to 50.2 in October.
A stronger US dollar makes the dollar denominated crude more expensive for holders of other currencies, denting demand.
December Brent Crude fell to US$82.85/barrel. Crude for January delivery dropped to US$83.24/barrel.
US light, sweet crude for December delivery declined to US$81.75/barrel, while the January contract last traded at US$82.42/barrel on the New York Mercantile Exchange (NYMEX).
BP (LON:BP) lost 1%, while fellow supermajor Shell (LON:RDSB) declined marginally, as did BG Group (LON:BG) and Cairn Energy (LON:CNE).
Tullow Oil (LON:TLW) went against the tide, posting a small gain.
Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) stood just above the opening levels.
Heritage Oil (LON:HOIL) led the midcaps, advancing 5%. Dragon Oil (LON:DGO) climbed 1.4%.
Soco international (LON:SIA) was at the bottom of the pile, sliding 6.7% after its well in the Democratic Republic of Congo encountered non hydrocarbon bearing sands.
JKX Oil & Gas (LON:JKX) declined 1.5%, while Melrose Resources (LON:MRS) and Premier Oil (LON:PMO) posted small losses.
Dana Petroleum (LON:DNX) and Salamander Energy (LON:SMDR) were little moved.
Wood Group (LON:WG) held steady. Another services company, Wellstream Holdings (LON:WSM), was sitting just below the opening level.
European Union operating oil ad gas producer and explorer Mediterranean Oil & Gas (LON:MOG) was among the top performing small caps with a 5% gain.