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Oil prices fell on Wednesday after a huge unexpected jump in crude stockpiles in the United States added to nerves caused by fading consumer confidence.

New York's main contract, light sweet crude for delivery in September, dropped 51 cents to 76.09 dollars a barrel.

London's Brent North Sea crude for September shed seven cents to 76.06 dollars.

Both contracts recovered from losses of more than a dollar each in early trading as concerns over an increase in US crude stockpiles eased slightly.

The US Department of Energy said crude oil inventories jumped 7.3 million barrels last week in the United States, a top energy consuming nation.

Analyst had expected a drop of 1.4 million barrels, according to a poll compiled by Dow Jones Newswires.

Gasoline stockpiles rose by 100,000 barrels, below analyst expectations for a build of 500,000 barrels, and distillates, which includes heating oil and diesel, rose by 900,000 barrels, while analysts projected a 2.1-million-barrel increase.

The data came on top of growing evidence of weak US consumer confidence which has sapped hopes for a strong economic recovery.

"The market continued to drift lower early, then after the inventory data, we seemed to accelerate further," said Tom Bentz, an analyst at BNP Paribas.

"However, the implied demand data did show increases in all major categories and the losses were pared back late in the day," analysts at BMO Capital Markets said in a client note.

Oil prices tumbled in US trade Tuesday after a closely watched survey showed that American consumer confidence plunged to its worst level in five months due to concerns about unemployment amid an uncertain economic outlook.

"Falling consumer confidence and the growing likelihood of a double-dip in house prices have put a further dent in the already deteriorating outlook for consumption growth," research house Capital Economics said in a note to clients.

"Without consumers on board, the economic recovery is looking dangerously vulnerable."

Story from AFP
AFP 07/28/2010 21:47

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