Oil prices dipped in Asian trading Thursday but held above US$87 a barrel after a U.S. inventory report showing larger than expected fuel stocks pulled crude futures back from a new trading record.
Light, sweet crude for November delivery fell 9 cents to US$87.31 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore.
The Nymex crude contract lost 21 cents to settle at US$87.40 a barrel Wednesday in the U.S. after trading at a record US$89 a barrel.
The unexpectedly large gains in U.S. crude oil and gasoline inventories won the day over news that Turkey's parliament approved a government plan to attack Kurdish rebels in northern Iraq and word of an explosion at a small refinery in Montana.
The U.S. Energy Department's weekly inventory report also countered previous perceptions that oil supplies are falling and demand is growing, analysts said. Many argue that speculative investing is the real culprit behind oil's rally over the last week.
Supply and demand fundamentals do not support prices near $90 a barrel, they say.
Also, despite the vote of approval by the parliament, Turkey's government said a move into Iraq isn't imminent, and a Turkish incursion would have minimal impact on Iraqi oil supplies, analysts said.
The Energy Information Administration reported that crude inventories rose 1.8 million barrels during the week ended Oct. 12, more than the 1 million barrel increase analysts surveyed by Dow Jones Newswires had expected on average.
The EIA also said gasoline supplies rose 2.8 million barrels last week, nearly triple analyst expectations for a 1 million barrel increase.
Distillates, which include heating oil and diesel fuel, rose 1 million barrels last week, the EIA said, while analysts had predicted a fall of 400,000 barrels.
December Brent crude fell 28 cents to US$82.85 a barrel on the ICE futures exchange in London.
Nymex heating oil futures lost 0.46 cent to US$2.3143 a gallon (3.8 liters) while gasoline prices added 0.20 cent to US$2.1486 a gallon. November natural gas futures fell 4.8 cents to US$7.410 per 1,000 cubic feet.
The EIA also reported that U.S. refinery activity fell last week by 0.5 percentage point to 87.3 percent of capacity. Analysts had expected refinery utilization to grow by 0.4 percentage point.
British Foreign Secretary David Cameron said that Russian President Vladimir Putin should be outvoiced about the crisis in Ukraine. In order to do this, the West needs to provide even greater support for Kyiv