NEW YORK -- Crude oil futures prices dropped below $51 a barrel yesterday as supply concerns ahead of the Northern Hemisphere winter eased after an unexpectedly high rise in US inventories.
An interest rate hike in China yesterday -- which could curb the country's appetite for oil -- and positioning ahead of the Nov. 2 US election also pushed prices lower, analysts said.
On the New York Mercantile Exchange, crude for December settled at $50.92 a barrel, or $1.54 lower than Wednesday's finishing price.
The US Department of Energy said Wednesday that crude supplies increased by 4 million barrels to 283.4 million barrels last week, about double the increase Wall Street was expecting.
Supply worries were also allayed by news of some recovery in the hurricane-battered Gulf of Mexico, including reports that 100,000 barrels are back on line in the region, said John Kilduff, senior vice president of energy risk management at Fimat USA.
''If these bearish elements continue . . . I think that might be it for the price run," Kilduff said, adding that yesterday's drop could signal a downward trend.
On Monday, crude per barrel on Nymex hit an all-time intraday high of $55.67. The record Nymex closing price of $55.17 was reached Friday and Tuesday.
Washington's inventory of distillate fuel, which includes heating oil and diesel, contracted by 2.4 million barrels to 116.6 million barrels, or 12 percent lower than a year ago. And unlike in previous weeks, the market failed to react to the sixth straight week of drops in distillates.
Heating oil for November delivery was down 4.3 cents at $1.4530 in late trading on the Nymex. The contract expires today.
In London, Brent crude futures fell $1.06 to settle at $48.39 on the International Petroleum Exchange. Brent briefly traded as high as $51.95 in intraday trading Wednesday, but lost $2.50 before closing.
Meanwhile, Venezuela's oil minister said yesterday that the world's oil producers don't have much capacity to increase output, which should keep prices high throughout 2005.