Crude oil dropped as stockpiles increased above forecast

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Crude oil dropped as stockpiles increased above forecast
Yesterday, crude oil futures dropped to a two week low after the U.S. Energy Department reported an increase in the oil stockpiles last week. Oil futures fell around 1.6% after the report showed that oil inventories climbed by 3.42 million barrels to 366.5 million barrels in the week ended April 29, 2011 against the forecasted figure of 2 million barrels.

A larger than estimated increase in oil inventories put downward pressure on oil futures prices. The American Petroleum Institute (API) reported on Tuesday that the U.S. crude oil stockpiles rose by 3.2 million barrels to 364.2 million barrels in the week ended April 29, 2011.

At MCX, crude oil future for May contract closed at Rs. 4,875.00 per barrel, down by 2.01%, after opening at Rs. 4,972.00 against the previous closing price of Rs. 4,975.00. It touched the intra-day low of Rs. 4,856.00 with a business volume of 116,342 lots.

Crude oil for June future, at NYMEX, closed at US$109.24 per barrel, down by $1.81, after opening at US$110.68 against the previous closing price of US$111.05. It touched the intra-day low of US$108.48 with a business volume of 300,333 lots.

Oil prices also weakened after the U.S. employment increased by 179,000 in April, less than estimated figure of 198,000, from a revised 207,000 in March, reduced the optimism about economic growth in world's largest oil consuming nation.

Moreover, the Institute for Supply Management (ISM) non-manufacturing index fell to 52.8 in April, the lowest level since August, from 57.3 in March. A weaker US economic data created negative sentiment among the investors that kept the oil prices in negative zone yesterday.

Read more about: futures, mcx, oil and gas, investment
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