Oil fell from a 2-1/2-month high to below $49 a barrel today, after bearish industry data showing large builds in US crude stocks eroded investor sentiment from better-than-expected US housing data.
Analysts said data from the American Petroleum Institute, which showed crude stocks rose much more than expected last week, reflected poor demand at refineries and could foreshadow an equally poor set of numbers from the US Energy Information Administration due later.
US light crude for April delivery fell 50 cents to $48.66 a barrel by 6.21am, erasing some of Tuesday's gains of $1.81 that took the contract to settle at $49.16 - the highest settlement since December 1st, 2008.
London Brent crude fell 62 cents to $47.62.
“The market is taking profit on expectations that the EIA report is also going to show a large build in crude stocks,” said Greg Smith, a fund manager at Global Commodities in Australia.
“But the sentiments are still quite positive and the market seems to looking for any sort of bullish news to justify buying at these levels, so that may herald an uptrend in oil prices.”
The American Petroleum Institute (API) said in its inventory report late yesterday that domestic crude stocks rose 4.7 million barrels last week to 349.9 million, dwarfing forecasts for an increase of just 1 million barrels.
The US Energy Information Administration (EIA) will issue its own stock data later on today, with crude oil inventories seen up last week as refinery demand remained tepid and imports increased a little, an expanded Reuters poll showed.
Oil has tumbled $100 from a record high above $147 last July as the global economic meltdown slashed demand for the fuel worldwide.
But prices, which sank to levels below $35 a month ago, have since stabilised in the $40-$50 range, as producer group OPEC cut output by 4.2 million barrels per day (bpd) and vowed at its Sunday meeting to achieve higher compliance from members to reduce production.
“Overall, I think we're seeing more funds flowing back into commodities markets and there are now more efforts in trying to push oil prices through $50 levels,” said Gerard Rigby, an analyst at Fuel First Consulting.
Reuters