Wednesday, May 23, 2012

Oil Extends Drop After U.S. Supplies Increase to 22-Year High

By Mark Shenk | Bloomberg

Crude oil futures extended declines after the U.S. Energy Department said stockpiles rose to a 22- year high.

Supplies climbed 883,000 barrels to 382.5 million barrels. Inventories were forecast to gain 1.65 million barrels, according to the median of 12 analyst estimates in a Bloomberg News survey.
Gasoline inventories fell 3.3 million barrels to 201 million last week, the Energy Department said today. Stockpiles were forecast to slip 650,000 barrels, according to the median of 12 analyst estimates in a Bloomberg News survey.

Distillate supplies, which include heating oil and diesel, fell 309,000 barrels to 119.5 million. Stockpiles were estimated to decrease 500,000 barrels.

Crude oil for July delivery fell $1.37, or 1.5 percent, to $90.29 a barrel at 10:40 a.m. on the New York Mercantile Exchange . Oil traded at $90.71 a barrel before release of the inventory report at 10:30 a.m. in Washington.

Oil also fell as European Union leaders are gathering in Brussels tnnight to discuss the euro-region's debt troubles and after Iran agreed to grant access to United Nations nuclear inspectors.
The summit is the 18th since Greece was convulsed by debt and the first since an anti-austerity campaign carried Francois Hollande to France's presidency.

European Summit

German Chancellor Angela Merkel is facing calls for measures she opposes, including euro bonds, the use of European money to recapitalize banks, a bigger rescue fund and extra time for debt-swamped countries to cut spending.

"The moves in just about all the markets are related to what's going on in Europe," said Phil Flynn, an analyst at futures brokerage PFGBest in Chicago. "There's a little bit of optimism that the Iran talks will succeed."

The International Atomic Energy Agency will be given access to Iran's Parchin military complex, Director General Yukiya Amano said yesterday. World powers resumed talks with officials from the Islamic republic in Baghdad today. Iran is suspected by the U.S. and its allies to have worked on the trigger for an atomic bomb at Parchin.

The Baghdad talks between Iran and the U.S., U.K., France, Russia, China and Germany follow an April 14 gathering in Istanbul where the sides failed to produce an accord. Discussions last month were described as "constructive." The talks will extend into a second day tomorrow, Iranian state-run Press TV reported without saying where it got the information.

To contact the reporter on this story: Mark Shenk in New York at
To contact the editor responsible for this story: Dan Stets at

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