Brent oil trading near $118, US crude stocks head lower

Brent oil prices are trading back near $118 a barrel this morning after yesterday’s OPEC meeting boosted crude futures, whilst US oil stocks fell nearly 5 million barrels last week, adding fuel to high oil prices.

Latest Brent Oil Price

In London, Brent crude oil futures for July 2011 delivery was trading at $118.11, 07.50 GMT this morning on the ICE Futures Exchange after jumping one percent in trading on Wednesday.

In America, domestic crude oil stocks fell by 4.8 million barrels, according to the US EIA (Energy Information Administration) surpassing analysts’ expectations for a modist 300,000 barrel decline.

“What this means is that there will be less spare capacity to handle another unforeseen outage. The market will price in this risk premium, and the way they do that is by speculators coming in and buying it up.” said Tony Nunan, a risk manager with Tokyo based Mitsubishi Corp.

Meanwhile, Wednesday’s OPEC meeting also boosted Brent and WTI oil prices as member countries failed to agree any oil output increase.