LONDON (AFP) - Oil prices fell below 49 dollars in New York for the first time in over a month as a surge in US crude stockpiles eclipsed news of the reelection of US President George W. Bush.
In volatile trading, the main US oil contract prices rallied above 50 dollars in Asia early on amid expectations of a Bush victory, before plunging to as low as 48.65 dollars on news of the jump in crude inventories.
New York`s main contract, light sweet crude for delivery in December, stood at 49.27 dollars a barrel in late morning deals, showing a loss of 35 cents from the previous close.
In London the price of Brent North Sea crude oil for delivery in December dropped 50 cents to 46.05 dollars a barrel in late trading.
Prices rebounded briefly on news that Democrat John Kerry had conceded the US election in a telephone call to Bush, but soon sank back into loss again as the market`s focus returned to supply issues.
Crude oil inventories surged 6.3 million barrels to 289.7 million barrels in the week to October 29, the Energy Department said.
"Clearly the build is much bigger than the market consensus," Societe Generale analyst Frederic Lasserre said in Paris.
"We expected no more than a one-million barrels increase. At the same time we still have draws on distillates, especially heating oil."
Distillates -- mostly heating oil and diesel -- fell for the seventh consecutive week, declining by 900,000 barrels to 115.7 million, below the average range.
"If we get a cold winter in the US we are still exposed to a shortage of heating oil supply," Lasserre said.
Analysts said markets were betting that a win by Bush would push prices higher because his policies would be likely to further fuel tensions in the oil-rich Middle East.
Meanwhile Kerry was thought more likely to dip into the US Strategic Petroleum Reserve (SPR) if voted into the White House, and pursue stronger fuel efficiency drives.
"We know that the Bush administration won`t use the SPR for price regulation and won`t probably change either their policy in Iraq," Lasserre said.
"So we are back to (studying) the fundamentals, back to stocks levels, back to temperatures, back to the shortage of heating oil which probably means back to previous price levels."
The crude oil inventories data exclude the 670.7-million-barrel US Strategic Petroleum Reserve, an emergency supply stored in huge underground salt caverns along the coast of the Gulf of Mexico.
US crude oil futures slumped by over 10 percent from an October 25 record summit of 55.67 dollars before rebounding, as worries about a possible supply crunch in the United States this winter diminish.
Adjusted for inflation, prices remain well below the levels reached in the wake of the 1979 Iranian revolution when prices surged beyond the equivalent of 80 dollars a barrel in today`s money.
11/03/2004 - 17:27 GMT - AFP