Crude Oil Slips as Stockpile Continues to Weigh

By Christian BerthelsenDow Jones Newswires

Crude-oil prices fell Thursday as continued bearish sentiment from Wednesday's inventory report prevailed in the absence of new drivers in the market.

Light, sweet crude for delivery in August ended down 66 cents, or 0.6%, at $105.84 a barrel on the New York Mercantile Exchange. It was the lowest settlement since June 11.

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Brent crude for August, the global benchmark, finished down 79 cents, or 0.7%, at $113.21 a barrel on the ICE Futures Europe exchange. It was the largest one-day decline for the contract since May 5.

Analysts said there was little momentum in the market as Iraq headlines faded and traders paused to analyze the potential impact of a U.S. government decision to allow two energy companies to export minimally processed light oil, in a first break in the nation's nearly four-decade-old ban on unrefined oil exports. The news was first reported late Tuesday by The Wall Street Journal.

The market continued to absorb the U.S. government's weekly report on oil inventories, released during the previous session, which showed an unexpected jump of 1.7 million barrels in national stockpiles and a second consecutive increase in inventories at the delivery point for the benchmark U.S. contract in Cushing, Okla. Declining supplies at Cushing have been a key driver for domestic oil-price gains this year, and the potential reversal of that trend could be bearish for the market. Stocks of refined petroleum stocks also rose.

"Yesterday's report was a little on the bearish side," said Kyle Cooper, managing partner of advisory firm IAF Advisors. "Today's a continuation of the reaction to that."

Trading volume was light and dropped noticeably during the World Cup soccer match pitting the U.S. against Germany.

"It's all about the soccer game," said Price Futures Group account executive Phil Flynn. "The volume magically dried up when the game started."

Reformulated gasoline blendstock, which is near-finished motor gasoline, ended down 0.71 cent, or 0.2%, at $3.0856 a gallon on the Nymex. July diesel ended down 1.6 cents, or 0.5%, at $3.0138 a gallon.