Oil prices fall below USD 85 a barrel

Oil prices dropped further Wednesday ahead of the release of weekly U.S. fuel data expected to show crude stocks rose last week.

Photo: Oil prices fall below USD 85 a barrel

Light, sweet crude for December delivery fell 48 cents to US$84.79 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract fell 75 cents to settle at US$85.27 a barrel Tuesday.

The U.S. Energy Department's data section will issue its inventory report later Wednesday.

"Tonight's report by the U.S. Energy Information Administration is likely to be important in shaping perceptions on how tight the oil market is and the strength of oil demand," said David Moore, commodity strategist at the Commonwealth Bank of Australia in Sydney.

"At the moment, the opinion in the oil market is divided as to just how tight the oil market is and that's contributing to the volatility that we're seeing in the oil price," Moore added.

Analysts surveyed by Dow Jones Newswires on average predict crude inventories rose 300,000 barrels during the week ended Oct. 19. However, estimates vary widely, ranging from an increase of 2 million barrels to a decrease of 2 million barrels.

Analysts also predict the EIA report will show refinery utilization rose 0.3 percentage point; gasoline supplies, still near record lows, rose 1.1 million barrels; and distillate stockpiles, which include heating oil and diesel, rose 200,000 barrels.

Traders have shrugged off initial concerns about any threat to Iraqi oil flows from a possible Turkish incursion into northern Iraq in search of Kurdish rebels.

Crude oil futures have declined every day since the front-month contract rose to a record above US$90 a barrel last week.

December Brent crude declined 27 cents to US$82.58 a barrel on the ICE futures exchange in London.

Heating oil futures lost 0.73 cent to US$2.2925 a gallon (3.8 liters) while gasoline prices fell 0.88 cent to US$2.1001 a gallon.

Natural gas prices rose 3.2 cents to US$6.793 per 1,000 cubic feet.