Oil prices slide on surprise jump in US inventories

January 21, 2011 | 09:51

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World oil prices slumped on Thursday as official data showed an unexpected jump in US crude inventories, analysts said.

Brent North Sea crude for delivery in March slid $1.81 to $96.35 a barrel in late London trade.

New York's main contract, light sweet crude for February, dived $2.45 to $88.41 a barrel.

Crude stockpiles in the United States, the world's biggest consumer of oil, climbed 2.6 million barrels to 335.7 million barrels last week, the US Department of Energy said.

Analysts had forecast a drop of 900,000 barrels in the week to January 14 for the United States, which is the world's biggest oil consumer.

"US crude oil stocks bucked expectations for a modest decline," said BNP Paribas analyst Harry Tchilinguirian.

"The expectation for a decline in the headline number this week stemmed from the assumption that builds elsewhere in the US would not be sufficient to offset declines on the West Coast following outages early January on the Trans Alaska pipeline system."

Crude futures are sliding one week after almost reaching $100 a barrel for the first time since October 2008 amid the temporary shutdown of the Alaskan pipeline.

Earlier this week, the IEA warned that crude near $100 is posing a real risk to economic recovery.

In its latest monthly report, the International Energy Agency said "recent price levels already pose a real economic risk -- something of deep concern to producers and consumers alike."

Oil prices of $100 a barrel represent a burden of five percent of gross domestic product on the global economy, the IEA calculated.

AFP

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