The price of oil fell below $31 a barrel here on Wednesday in response to a strong increase in US crude stock levels, dealers and analysts said.
The Brent North Sea benchmark crude for November delivery was fetching $30.65 a barrel, well down on its closing level of $31.05 on Tuesday.
Market players were responding to fresh figures from the American Petroleum Institute (API), which revealed on Tuesday that crude stocks rose by 3.4 million barrels in the week to last Friday to 287.76 million barrels.
Fears over stock shortages were the main factor in driving oil prices to 10-year high points above $35 a barrel last month, a market spike which brought protestors to the streets of western Europe and threatened to result in a global economic downturn.
"Crude stocks are building and gasoline stocks are building too," noted Prudential Bache analyst Tony Machacek. "There are no cold temperatures yet so there are no worries at the moment for heating oil."
The market has also been concerned that border tension between Iraq and Kuwait could have a knock-on effect on oil supplies, driving prices higher. But Machacek said this threat was now largely being discounted.
"Even if something happens, I would not expect a major effect." He added that the market had now turned its attention to a meeting of the Paris-based International Energy Agency, which was to discuss the possibility of European governments forcing oil companies to release crude from their compulsory reserves to ease the supply shortfall.
But Machacek said: "The market does not expect a release. I'd be very surprised if they do." – (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)