Oil Falls In A Correctional Move And Higher Stockpiles

Crude oil fell from the highest settlement since May 2011 taking a breather following a near 4% gain over the past two days. Also weighing on prices was the US government data that showed crude stockpiles gained the most in four months.

Oil hit the highest of $112.21 on Wednesday amid concerns the Syrian conflict might spread though the region, disrupting oil supplies from the Middle East which pumps a third of the world`s oil .

The US and Britain are preparing a joint military action against Syria without the authorization from the UN. Yet, President Barack Obama is facing new obstacles with British allies and US lawmakers that could delay any military action in response to last week`s chemical weapons attack.

“Once you deflate the Middle Eastern tension and get back to economics, they suggest that oil should be sub-$100. Fundamentals at play say anything over these levels for oil is expensive," said Jonathan Barratt from Barratt’s Bulletin in Sydney.

- Crude is trading around $108.84 a barrel after falling $1.26.

- Brent is trading around $115.18 a barrel after falling $1.42.

Weighing on prices was the EIA report yesterday which showed that crude inventories increased by 2.99 million barrels last week, to 362 million barrels, about four times the median estimate. This being the biggest gain in four months and the first in August.

Gasoline stockpiles slid by 587,000 barrels compared with an expected decline of 1.38 million barrels. Distillate inventories, including heating oil and diesel, fell by 316,000 barrels compared to a projected 550,000 barrel increase.

- Natural gas is trading at $3.594 per cubic feet after rising 0.34%.

- Gasoline is trading at $3.0691 per cubic feet after falling 0.82%.

- Heating oil (diesel) is trading at $3.18 a gallon after falling 0.88%.