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US Stockpiles & Europe’s Crisis Reduce Demand for Oil

October 14, 2011 at 1:53 by Vladimir Vyun

Fundamentals weren’t good for oil, making prices to go down. Among the negative factors were the increase of the US stockpiles and the downgrade of Spain’s credit rating by Standard & Poor’s.

US oil inventories increased by 1.3 million barrels to 337.6 million barrels from a week ago. The average level for crude oil refinery inputs was 14.5 million barrels per day during last week ending October 7, 563 thousand barrels per day less compared to the previous week’s average.

S&P cut the long-term rating on the Kingdom of Spain to AA- from AA and set the outlook to negative. The downgrade of Spain refueled the fears that the credit crisis would spread across the European Union. The problems in Europe can slow the global economic recovery, reducing demand for oil.

November futures for delivery of crude for fell $0.46 to $83.77 per barrel in electronic trading on NYMEX before trading at $84.01. Brent crude traded at $111.30 per barrel as of 1:46 GMT on ICE after it went down from $111.25 to $111.17 yesterday.

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