Oil cautiously slides on reserve expectations

Oil prices dropped to a six month low on Wednesday as the weekly inventory data on US petrol stocks is published and expected to show marked increase in reserves. As analysis and predictions of a milder winter filter through from meteorologists due to the rise of El Nino the pressure on reserves will mean ample stock.

ICE Brent for November delivery slipped 55 cents to $61.62 a barrel in mid-morning London trade, furthering the $1.88 decline from the previous session. Brent touched a six-month low of $61.16, representing a fall of more than 22 per cent from its record high of $78.65 last month, and is a bigger decline than other price slides seen in the past three years.

October West Texas Intermediate dropped 56 cents to $61.10 a barrel in electronic trade, extending the $2.04 decline from the previous session, and a 22 per cent decline from its record peak of $78.40 in July.

The market now feels confident that reserves are more than enough to carry through the winter, even if the winter is colder than expected.