Light oil prices drop after rise in US stockpiles

Light oil prices fell Wednesday after official data showed a surprise jump in crude inventories in the United States, the world's biggest energy consuming nation.

New York's main contract, light sweet crude for October delivery, dropped 62 cents to 71.43 dollars a barrel, a day after it climbed to a 10-month intraday high of 75 dollars.

"I think a lot of it is in reaction to the fact that crude oil inventories actually built when the market expected a draw, that was the biggest surprise for the market today," said Andy Lipow of Lipow Oil Associates.

Contributing to the drop was a forecast by motorist group AAA that Americans would slash their early September Labor Day holiday travel plans as they tighten their belts amid prolonged recession, he said.

Prices fell after the US Department of Energy reported that American crude stockpiles rose by 200,000 barrels to 343.8 million in the week to August 21. Analysts had expected a drop of about 600,000 barrels.

ODL Securities trader Brian Myers described the increase in inventories as "tepid" but it was enough to send prices lower after a recent surge. On Tuesday, New York crude hit a 10-month high of 75 dollars following strong US consumer confidence data, before plunging on profit-taking.

Barclays Capital said in a clients' note that the 65-75 dollars range remained the "most comfortable for the market this quarter from a purely fundamental basis."

"Sustaining the break above that range requires a continuation of the recent improvements in both macroeconomic and oil market data, and that process remains firmly on track, in our view," it said.