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Oil tumbles on inventories build, gasoline plunge, stronger dollar

05-12-2011 09:07 BJT

NEW YORK, May 11 (Xinhua) -- U.S. crude oil price on Wednesday sharply retreated after the earlier two-day gains as U.S. crude inventories rose largely for the third straight week. Gasoline future price dropped to the trading limit and the dollar strengthened amid European debt woes.

The Energy Information Administration reported on Wednesday the U.S. crude oil inventories increased 3.8 million barrels in the week ended May 6, registering the third straight large build and topping the markets' estimates.

Meanwhile, the EIA report showed the U.S. gasoline demand dropped 2.4 percent in the week due to high fuel prices, the largest drop in seven consecutive weeks of demand declines, while gasoline inventories ended a long string of draws with a 1.3 million-barrel rise despite a drop in refining activity around the country.

After the report, gasoline for June delivery plunged, losing 26 cents and hitting CME's trading limit. CME was forced to halt the crude, heating oil and gasoline trades for the first time in more than two years. Gasoline future price drop posed much pressure on the crude markets.

Besides, the dollar gained sharply against the euro as the Greece's debt problems remained unsolved and seemed to be worsening. The dollar rose nearly 1 percent against a basket of currencies. Stronger dollar made commodities less attractive.

Light, sweet crude for June delivery dropped 5.67 dollars, or 5. 46 percent to settle at 98.21 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery also tumbled over 4 percent and last traded below 113 dollars a barrel.

Editor:Wang Xiaomei |Source: Xinhua

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