Oil prices dip before US energy report

LONDON: Oil prices slid on Wednesday, falling under 79 dollars as traders took their lead from tumbling global equities and awaited this week's update on energy stockpiles in key consumer the United States.

New York's main contract, light sweet crude for December delivery, lost 58 cents to 78.97 dollars a barrel.

Brent North Sea crude for December shed 62 cents to 77.30 dollars.

European shares slumped on Wednesday after sharp losses in Asia and a poor Wall Street performance overnight amid renewed concern about the pace of US economic recovery, analysts said.

Financial markets were spooked after private research firm the Conference Board reported Tuesday that US consumer confidence fell sharply in October amid growing worries about rising unemployment in the recession-wracked economy.

Later Wednesday, at 1530 GMT, the US government's Department of Energy will release its weekly snapshot of American crude oil stockpiles for the week ending October 23.

Market expectations are that US gasoline (petrol) reserves fell 1.2 million barrels last week, according to analysts polled by Dow Jones Newswires.

Stockpiles of distillates, which include diesel and heating oil, are seen declining by 1.1 million barrels. Crude reserves are expected to climb by 1.4 million barrels.

"Today, we are closely monitoring US distillate stockpiles with the release of the weekly US fuel inventories," said VTB Capital analyst Andrey Kryuchenkov.

"Colder weather in the US will in our view support demand for distillates while we expect crude stocks to rise on the back of relatively strong imports," he said.

Investors were also cautious ahead of Thursday's official gross domestic product (GDP) figure for the US economy.

Most analysts say GDP will see a 3.2 percent expansion, the first growth for the world's largest economy after a year of contractions.

Investors also awaited fresh US data due out later Wednesday, including durable goods orders and new home sales.

"Market participants will be keeping an eye on US durable goods figures today, which could be the next sign for the US economy, which along with US GDP data tomorrow could give a direction of the world economy for the rest of the week," said analysts at the Sucden brokerage in London.

Oil prices hit 82 dollars last week, the highest since October 2008, partly on the back of a weak US currency which makes dollar-priced crude cheaper for holders of stronger foreign units.