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Oil prices drop on US demand worries

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US economic woes coupled with bearish inventories data from the America Petroleum Institute (API) pushed crude oil prices to five week lows today.

API said that oil stockpiles in the US added 2.549 million barrels last week, a sign that demand for oil from the world’s largest energy consumer is falling.

The inventories report added to concerns over the strength of the economic recovery in the US.

Earlier this week, the Institute for Supply Management (ISM) reported that manufacturing activity in the US slowed in July and the Commerce Department said that consumer spending unexpectedly fell in June.

Last Friday, the Commerce department revised its first quarter GDP growth estimate from 1.9 percent to 0.4 percent.

On a brighter note, ADP said that the private sector added 114,000 jobs in July.

While failing to dispel fears of an double dip recession in the US, the data improved outlook for the key non-farm payrolls report, which will be out on Friday.

US light, sweet crude
for September delivery dropped US$1.1 to US$92.69/barrel in morning trade on the New York Mercantile Exchange (NYMEX).

September Brent crude fell US$1.48 to US$114.76/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Global Energy Development (LON:GED), up 4 percent at 92.33 pence at midday

Xtract Energy (LON:XTR)
, up 3 percent at 2.75 pence

Egdon Resources (LON:EDR)
, up 2.5 percent at 15 pence

Caspian Holdings (LON:CSH), up 25 percent at 0.374 pence

Xcite Energy (LON:XEL), up 1.5 percent at 152.5 pence

The top fallers were:

Roxi Petroleum (LON:RXP), down 10 percent at 3.26 pence at midday

Independent Resources (LON:IRG), down 9.5 percent at 43 pence

Petro Matad (LON:MATD)
, down 9 percent at 96 pence

Matra Petroleum (LON:MTA), down 9 percent at 1.46 pence

Dominion Petroleum (LON:DPL)
, down 8.5 percent at 4.91 pence

Quick facts: Brent Crude Oil

Price: - -

LSE:BRENT
Market: LSE
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