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Crude retreats as API and EIA US oil stockpiles climb, Greek debt concerns linger

18th Mar 2010, 2:17 pm Crude retreats as API and EIA US oil stockpiles climb, Greek debt concerns linger

Oil prices retreated after making gains yesterday as the US dollar gained ground on the euro.

Yesterday’s inventories update from the EIA (Energy Information Administration) showed an increase of just 1 million barrels in crude inventories for the previous week, while distillates including heating oil and gasoline stocks were down 1.5 million barrels and 1.7 million barrels respectively.

On Tuesday, API (American petroleum Institute) said crude inventories increased by 0.4 million barrels, while distillate and gasoline stockpiles dropped 3.7 million barrels and 0.7 million barrels.

The updates signalled lower demand for crude as stockpiles kept rising, though oil was supported by OPEC’s (Organisation of Petroleum Exporting Countries) decision to leave its production quotas for this year unchanged. The Fed’s decision to leave its interest rates unchanged for an “extended period” also had a positive impact on crude prices.

Today’s slight declines were due to gains in the US dollar against the euro, which was pushed down by comments from a Greek official, who said that the debt laden country could turn to support to the International Monetary Fund as it was unlikely that it would receive aid from fellow euro zone countries. A Stronger American currency makes dollar-denominated commodities such as crude more expensive for holders of other currencies.

May Brent Crude slid to US$81.63/barrel, while US light, sweet crude was down to US$82.51/barrel.

Blue chips oil and gas producers didn’t show much movement today. BG Group (LSE: BG) was in the lead with a 2% gain. Cairn Energy (LSE: CNE) added 1.2%, while BP (LSE: BP) was up 1%, while fellow supermajor Shell (LSE: RDSB) was flat, as was another FTSE 100 constituent Tullow Oil (LSE: TLW).

Oil and gas engineering firms Amec (LSE: AMEC) and Petrofac (LSE: PFC) declined marginally.

Midcaps were mixed. Melrose Resources (LSE: MRS) and Dana Petroleum (LSE: DNX) gained less than 1%, while Heritage Oil (LSE: HOIL) and Soco International (LSE: SIA) posted small losses. Dragon Oil (LSE: DGO), JKX Oil & Gas (LSE: JKX) and Premier Oil (SLE: PMO) were flat. Salamander Energy (LSE: SMDR) slid to the bottom of the pile with a 6% loss on today’s announcement of a bond issue.

Services companies did well as Wood Group (LSE: WG) gained 1.7% after securing a contract from BP, while Wellstream Holdings (LSE: WSM) rallied 6% after announcing its full year results.

Energy investor Xtract Energy (AIM: XTR) rallied 14%, while Mongolia-focused Petro Matad (AIM: MATD) and Iraq operating Irish oil company Petrel Resources (AIM: PET) followed with gains of 8%, US focused oil and gas junior Caza Oil & Gas (AIM: CAZA) added 7% and oil and gas company with assets in Iraq, Syria and Gulf of Mexico, Gulfsands Petroleum (AIM: GPX) advanced 6%.

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