Oil prices fell below $100 a barrel today after the US government revealed that stockpiles of distillates had fallen less than expected last week in the aftermath of Hurricane Gustav.
Prices also weakened as the International Energy Agency (IEA) reduced its estimate for global oil demand this year and next. Crude futures had risen earlier today after the OPEC oil cartel cut production by over 500,000 barrels a day.
Brent North Sea crude for delivery in October dropped by $1.08 to $99.26 a barrel. Brent had gone as low as $98.89 in Asian trade prior to the OPEC decision, which then sent prices higher.
New York's main contract, light sweet crude for October, stood 55 cents lower at $102.71 a barrel following the US inventory data and IEA report.
The US government said that stockpiles of distillates, which include heating fuel, dropped by 1.2 million barrels in the week to September 5. Analysts' consensus forecast had been for a decline of 2.2 million barrels. Distillates are being watched closely by the market ahead of the northern hemisphere winter.
The US Department of Energy added that crude oil inventories had fallen by 5.9 million barrels last week, against market expectations for a drop of 5 million.
Last month's Hurricane Gustav had spared damage to US energy facilities in the Gulf of Mexico, but refineries and platforms were nevertheless forced to shut on grounds of safety, affecting production.
Meanwhile after a marathon meeting into the early hours of this morning, OPEC president and Algerian Energy Minister Chakib Khelil said that the cartel's output cut amounted to 520,000 barrels a day and would start immediately. He announced a new OPEC output quota of 28.8 million barrels a day.
The cut immediately boosted prices, which had begun falling below $100 a barrel yesterday.
