Oil prices edge up despite negative data

Oil prices edged up on Wednesday despite dismal US economic data and a spectacular jump in US crude reserves that signaled weaker demand in the world’s biggest oil-consuming nation.

New York’s main contract, light sweet crude for October delivery, was up 89 cents from Tuesday’s closing value at 72.52 dollars.

London’s Brent North Sea crude for October rose 1.10 dollars to 73.48 dollars a barrel, having earlier fallen to a seven-week low at 71.75 dollars.

The US Energy Department reported Wednesday that crude oil inventories soared by 4.1 million barrels last week, much more than analysts had expected.

Stockpiles of gasoline or petrol rose 2.3 million barrels, trumping forecasts for a 500,000-barrel decline.

And distillates, including diesel and heating fuel, gained 1.8 million barrels. Analysts had pencilled in a smaller gain of 900,000 barrels.

The price rise “is very surprising given that the Department of Energy statistics were really bearish. We had builds, not only in crude, but also in gasoline and distillates,” said analyst Andy Lipow of Lipow Oil Associates.

“I think people were looking to cover their shorts that they?ve created during the last week to 10 days. As we started approaching near 70 dollars people are thinking ‘I don?t really want to sell’.”

The market has been undercut this week by mounting jitters over the strength of the global economic recovery and fell further early Wednesday after yet another batch of poor US economic data.

The Commerce Department reported that new home sales in July plunged by 12.4 percent from a month earlier to the lowest level since 1963, shattering analysts’ expectations for a modest rise.

Earlier, the department also reported a slight 0.3 percent rise in orders for manufactured durable goods — items such as planes, cars, refrigerators and computers.

But most economists had expected orders to rebound by a stronger 3.0 percent.

The small July rise was on the back of transportation equipment, mostly nondefense aircraft and parts. Excluding transportation, new orders decreased 3.8 percent.

The latest data came a day after existing US home sales — considered the core of the residential real estate market — plunged a whopping 27.2 percent in July to levels unseen in more than a decade.

“The shaky global economy continues to put pressure on crude prices,” said Victor Shum, analyst at Purvin and Gertz energy consultants.