Oil prices fall on unexpected U.S. crude build

Oil prices fall on unexpected U.S. crude build

Reuters, London

Oil prices fell on Wednesday after weekly data showed an unexpectedly large rise in U.S. crude stocks.

Benchmark Brent crude was 31 cents weaker at $24.14 by 1035 GMT (5.35 p.m. Jakarta time), while U.S. light crude futures shed 50 cents to $24.83 a barrel in out of hours trade.

Late on Tuesday, the American Petroleum Institute (API) reported that U.S. crude inventories grew by 6.3 million barrels, or around two percent, over the past week, narrowing the year-on- year deficit to 1.2 million barrels.

Analysts had predicted crude tanks would decline by 1.5 million barrels in the week to May 31.

The market is now waiting to see whether the unexpected build will be confirmed by government data to be released by the U.S. Energy Information Administration later on Wednesday.

Analyst Lawrence Eagles of GNI Research said: "The draw was a lot bigger than people had expected. They will now be waiting to see whether the figures are confirmed."

He said comments by Saudi Arabian Oil Minister Ali al-Naimi over the weekend ruling out an increase in output by the Organization for the Petroleum Exporting Countries (OPEC) had been largely expected and therefore had limited market impact.

"Supply and demand are balanced and are expected to continue to be so in the new few months and thus it is not expected that OPEC will make any changes in the ceiling level or quotas at its meeting," Naimi told the official Saudi Press Agency.

OPEC, which next meets in Vienna on June 26, has from the start of the year cut production quotas by 1.5 million barrels per day (bpd) to 21.7 million bpd, the lowest level for a decade, as it has sought to shore up prices.

But despite the tight rein on supply, economic weakness across the globe has meant flagging demand.

Traders and analysts are particularly focused on gasoline inventories at this time of year when U.S. motorists traditionally take to the roads for the summer driving season.

According to the API data, gasoline stocks slipped by 760,000 barrels, leaving stocks 8.34 million barrels, or some four percent, above levels at the same point last year.

The United States is the world's single biggest gasoline market, soaking up roughly two-fifths of global daily demand.