Oil Price Takes Big Hit As Stocks Swell

["Mark Jones" <jones118@xxxxxxxxxxx>]

[but if the massive new investment which the energy system needs is aborted
by a recession, then any future upturn will be even more constrained,
because the global energy infrastructure is old and worn out, and that's
been the problem since the 1970s; so what is happening is the progressive
decline of fossil energy systems despite the fact the supply is a crimp on
the economy and despite the continuing dependence of capitalist economy on
fossil. That's the truth behind 'short term flucutations'.  Mark]

By Richard Mably

LONDON (Reuters) - Oil prices slumped on Wednesday after a hefty
build in U.S. gasoline inventories stoked concerns that American
motorists are cutting down on their mileage this summer amid a
slowdown in the U.S. economy.

<Cut>


``The problem for the oil market is that U.S. economic growth is declining
toward zero and in the rest of the world the decline in growth is
accelerating,'' said Gary Ross of New York consultancy PIRA
Energy.

``Combine that with the inventory build and that's a recipe for price
weakness.''

Weekly U.S. stock figures from the American Petroleum Institute reported a
3.3 million barrel increase in U.S. gasoline tanks to 222.9 million barrels
in the week to June 22, the tenth week in a row that
stocks have risen.

U.S. gasoline futures prices that hit a record $1.17 in April fell over six
cents on Wednesday to 71.2 cents a gallon, their lowest in 17 months.

U.S. SLOWDOWN

Consumption has been crimped by record high pump prices during the spring
and fears that a slowdown in the U.S. economy, the world's biggest petroleum
importer, may turn into recession.

The U.S. Department of Energy (news - web sites) said on Wednesday that U.S.
petroleum products demand over the past four weeks had averaged 18.888
million barrels daily, 4.2 percent less than in
the same period last year.

``The lingering concern over stock positions has been completely blown
away,'' said John Russel, managing director of consultants PEL Pacific in
Bangkok.

The API showed crude stocks rising 565,000 barrels to 313.5 million barrels
or 20 million barrels, seven percent, higher than a year ago.