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Oil falls below $100 after surprise US supply jump

Oil falls below $100 after surprise US supply jump

June 2nd, 2011 in News

SINGAPORE (AP) - Oil prices fell below $100 a barrel Thursday in Asia after a report showed an unexpected jump in U.S. crude supplies, suggesting demand is weakening.

Benchmark oil for July delivery was down 49 cents to $99.80 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost $2.41 to settle at $100.29 on Wednesday.

In London, Brent crude for July delivery was down 34 cents to $114.19 a barrel on the ICE Futures exchange.

The American Petroleum Institute said late Wednesday that crude inventories rose 3.5 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 1.9 million barrels.

Inventories of gasoline rose 1.5 million barrels last week while distillates fell 1.4 million barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Thursday.

Disappointing signals from the U.S. economy also helped push prices down. On Wednesday, payroll processor ADP said private employers created just 38,000 jobs in May, down from 177,000 in April. Meanwhile, the Institute for Supply Management said U.S. manufacturing had its sharpest monthly decline in growth in March since 1984.

"Markets were expecting weak manufacturing and jobs reports, given the softness elsewhere of late, but they got much worse," DBS Bank said in a report. "That's no longer serious growth territory, it's growth-barely territory."

MasterCard SpendingPulse also reported that retail gasoline demand in the U.S. fell for the 10th consecutive week.

In other Nymex trading in July contracts, heating oil was steady at $3.01 a gallon and gasoline fell 2 cents to $3.05 a gallon. Natural gas futures dropped 1.3 cents to $4.65 per 1,000 cubic feet.