Oil Price Drops As U.S. Crude Stockpiles Jump

Oil fell for a second straight session on Thursday, weighed down by U.S. data showing an unexpected build in crude stockpiles last week and a drop in the euro against the dollar.

U.S. crude stockpiles shot up 3.9 million barrels in the week to Dec. 23, data from the U.S. Energy Information showed, as imports rebounded following shipping delays earlier in the month due to fog in the Houston Shipping Channel.

While the build was smaller than that reported by the American Petroleum Institute on Wednesday, it comes at a time when refiners typically draw down stockpiles for year-end accounting purposes and helped offset concerns about Iran's threats to shut the Strait of Hormuz, a vital oil shipping route.

"This is a pretty bearish report, but we have a couple of other things going on here," said Rich Ilczyszyn, chief market strategist and founder of brokerage iirtrader.com, adding: "The issue of Iran possibly closing the Straits of Hormuz is in the background."

Tehran threatened to block traffic through the crucial passage for Middle Eastern crude suppliers after the European Union's decision to tighten sanctions on Iran over its nuclear program, as well as accompanying moves by the U.S. to tighten unilateral sanctions. The U.S. said it would preserve oil shipments in the Gulf. Brent crude traded down 39 cents to $107.17 a barrel by 12:41 p.m. EST after falling nearly $2 the day before, on track to show a 13 percent rise for 2011 due in part to the prolonged disruption of Libyan exports.

Source: http://freeinternetpress.com/story/Oil-Price-Drops-As-US-Crude-Stockpiles-Jump-33290.html

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