Oil fell for a third day to hover above $49 a barrel this morning, hit by a large jump in US crude stocks and weak economic data that dented hopes of demand recovery in the world's top energy user.
The market is waiting to see if the US Energy Information Administration's (EIA) weekly report, due later in the day, confirms the higher-than-expected build in crude inventories from the American Petroleum Institute.
By 6.30am, US crude for May delivery was down 6 cents at $49.35 a barrel, after falling to $48.92 earlier, and by nearly 1.3 per cent overnight. ICE Brent crude was down 17 cents at $51.79 a barrel.
Oil prices have been stuck in a $47-$54-range for the past four weeks, having recovered from a low of $32.40 in December.
They are still down almost $100 from a record high above $147 last July.
"Crude fell on the back of weaker-than-expected March retail sales, which also dragged on equities, and the main worry is still the large weekly increase in crude inventories," said Peter McGuire, the Managing Director of Commodity Warrants Australia.
Industry group American Petroleum Institute (API) said last night US domestic crude stocks had risen by 6.5 million barrels last week, much higher than a 1.9 million-barrel increase forecast in a Reuters poll.
The EIA report, due at 2.30pm, is likely to show that US crude oil supplies rose for the sixth consecutive week, probably to the highest in almost 19 years as imports rebounded, a Reuters poll of analysts showed.
Collapsing demand has been the main driver of the builds. In its monthly outlook released yesterday, the EIA cut its 2009 world oil demand forecast by 180,000 barrels per day to just over 84 million bpd.
This comes after the International Energy Agency (IEA) slashed its world oil demand forecast for 2009 last Friday, sending oil prices down by 4 per cent on Monday.
Oil and other markets have been lifted by some glimmers of hope that the US economy was turning around. But US stocks slumped overnight as surprisingly bearish retail sales figures dimmed hopes the recession was abating.
Reuters