Oil tumbles after US inventory report disappoints

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Oil held near $45 a barrel after tumbling to the lowest level in nearly two months as US crude stockpiles fell less than expected.

In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 6,566 while Germany's DAX rose 1.3 percent to 9,545.

Crude prices inched up in choppy trading on Friday but Brent notched its largest weekly drop in almost six months, as strong U.S.jobs data and bargain hunting by investors pitted against seasonally weak consumption of oil. Find us on Facebook too! The USGC West Texas Intermediate (WTI) cracking margin averaged 63 cents/b in the reporting week, down from $1.57/b the week prior.

The American Petroleum Institute estimated that in the second quarter, the number of completed USA oil wells - those that drillers had finished making and were ready to produce oil or gas - plunged by 69 per cent in the second quarter compared with a year earlier.

IG Markets analyst Bernard Aw said traders were looking for bargains after Thursday's "substantial drop" in prices, but added the oversupply concerns will linger.

"The primary driver is the API numbers that popped out, which suggested that there was a bigger draw down than the market was expecting", David Lennox, a resource analyst at Fat Prophets in Sydney, told Bloomberg News.

Benchmark U.S. crude lost $2.29, or 4.8 percent, to $45.14 a barrel in NY. The grade fell US$2.29 to settle at US$45.14 on Thursday, the lowest since May 10. The price drop has been attributed to slowed global economic growth, decreasing energy demand and major producers flooding the market with oil. Brent crude, the global price, is down $2.18, or 4.5 percent, to $46.62.

The Brent was priced $46.27, the lowest since May 11, according to Reuters.

"A drop in refinery utilization in combination with super-strong imports helped to stymie the draw to crude", he said. Supplies have fallen from an 87-year high of 543.4 million barrels in the last week of April. Demand for the 30-year Treasury note grew, however, sending its price higher and its yield down to 2.13 percent from 2.14 percent.

Key oil futures contracts, which had been trading higher since Asian markets opened, plunged after the US Department of Energy reported its latest weekly petroleum data for the world's largest consumer of crude oil.

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