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Oil continues lower in Asian trade

Prices slumped after the US Energy Information Administration reported on Wednesday that American crude oil reserves rose by 200,000 barrels in the week ending May 9.

business Updated: May 15, 2008 09:10 IST

World oil prices continued lower in Asian trade on Thursday after an unexpectedly low rise in United States crude stocks.

New York's main oil futures contract, light sweet crude for June delivery, dropped 43 cents to 123.79 dollars per barrel.

The benchmark contract had closed down 1.58 dollars at 124.22 dollars a barrel on Wednesday at the New York Mercantile Exchange.

Brent North Sea crude for June dropped 31 cents to 121.55 dollars, after settling 2.24 dollars lower at 121.86 dollars in London on Wednesday.

Prices slumped after the US Energy Information Administration (EIA) reported on Wednesday that American crude oil reserves rose by 200,000 barrels in the week ending May 9. That was less than market expectations for a gain of 2.25 million barrels.

The EIA also said US gasoline, or petrol, stockpiles fell by 1.7 million barrels, which was larger than analysts' consensus forecasts for a drop of 200,000 barrels.

New York crude struck a record high of 126.98 dollars a barrel on Tuesday despite a report by the International Energy Agency (IEA) which cut its forecast for growth in global oil demand.

The Paris-based IEA, energy policy adviser to major industrialised countries, predicted that crude oil demand in 2008 would stand at 86.8 million barrels per day (bpd) --- about 390,000 bpd less than a previous estimate given in April.

The energy monitoring agency also said it now estimated world oil demand in 2007 at 85.8 million bpd, 150,000 barrels less than the April estimate.

Oil prices have surged since crashing through the 100-dollar-a-barrel barrier at the start of the year, but analysts said the market has recently been looking overbought.