Oil falls below $82 despite US crude supply drop

[November 17, 2010]  SINGAPORE (AP) -- Oil prices fell below $82 a barrel Wednesday in Asia as fears of slower Chinese growth offset a report showing that U.S. crude supplies unexpectedly plunged last week.

Benchmark oil for December delivery was down 83 cents to $81.51 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.52, or 3 percent, to settle at $82.34 on Tuesday.

Crude inventories fell 7.7 million barrels last week, the American Petroleum Institute said late Tuesday, suggsesting that demand for fuel is rising. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos, had expected an increase of 1.2 million barrels. The API also said gasoline stocks dropped while distillates rose.

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

Last week's crude inventory drop was the biggest for that week since 1982, according to energy consultant The Schork Report, and follows a 7.4 million barrel draw the previous week.

But fears that Chinese measures to contain inflation will undermine economic growth and oil demand are weighing on prices. China is the world's largest energy consumer.

Speculation that the European Union may have to finance a bailout of Ireland's debt is also hurting trader optimism.

"Concerns surrounding European debt and Chinese monetary policy that marred much of the beginning of this year having become influential again," Barclays Capital said in a report.

In other Nymex trading in December contracts, heating oil was down 3 cents at $2.28 a gallon and gasoline dropped 4 cents to $2.16 a gallon. Natural gas fell 2 cents to $3.80 per 1,000 cubic feet.

In London, Brent crude lost 93 cents to $83.80 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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