Oil price trading around $80 mark, US inventories down 4m

Oil prices are currently trading around the $80 a barrel mark on Thursday, after a 4m barrel steep decline in US crude inventories sent prices up 1 percent the previous day, as oil traders look to the fall in equities markets to take profits despite the weak dollar.

The US dollar was moving towards recent month lows on a basket of currencies on Thursday, after the US Federal Reserve reiterated its commitment to keep rates low for months to come, but this did not help to lift oil.

US crude oil futures for December fell 61 cents to $79.79 a barrel by 0339 GMT, after settling up 80 cents on Wednesday on the NYMEX. London Brent crude lost 59 cents to $78.30 a barrel on the ICE Futures Exchange.

“Today the market is down a little bit as we get a bit of a correction, after two days of fairly big gains,” said Tony Nunan, risk manager at Tokyo-based Mitsubishi Corp.

Crude oil futures rose above $81 a barrel on Wednesday after the US government EIA data showed a big drop of 4 million barrels, in the week to Oct. 30, versus analysts’ expectations for an increase.

Gasoline stockpiles also fell, down 300,000 barrels, against forecasts for a slight build, while distillates dropped a less-than-expected 400,000 barrels, the EIA said. Oil traders said the fall in oil prices on Thursday was driven by the weak stock markets in Asia, with Japan’s Nikkei average down 1.4 percent and Hong Kong’s Hang Seng index retreated a nearly 1 percent.

“The equities markets are moving oil prices,” said Soichi Okuda, chief economist at Sumitomo Shoji Research Institute.

Tags:  oil prices, US inventories