Crude oil fell on expectations that US inventories will swell in coming weeks as importers and producers in the Gulf of Mexico make up for disruptions caused by Hurricane Lili earlier this month.
Supplies have risen 5.2 percent to 287.6 million barrels during the past two weeks, according to the American Petroleum Institute. Imports and domestic production have risen as storm damage was repaired. UN negotiators will meet tomorrow to discuss weapons inspections in Iraq. Concern that the US would attack Iraq has sent prices up 37 percent this year.
"We're anticipating further inventory increases," said Tim Evans, senior energy analyst at IFR Pegasus in New York. "Imports are rising, which is pushing the inventories higher. Oil producers are increasing production, making more available."
Crude oil for December delivery was down US$1.10, or 3.9 percent, at US$27.10 a barrel at the 2:30pm close of floor trading on the New York Mercantile Exchange. If the contract settles at this level it would be the lowest closing price since Aug. 9. Oil fell 8.4 percent this week in the biggest weekly decline since April.
Selling by speculators accelerated after oil fell below US$27.77 a barrel, the low price reached on Tuesday, traders said.
Further selling was triggered when prices fell below US$27.53, the low reached on Sept. 4.
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