A customer holds a nozzle to fill up his tank in a gasoline station in
Nice December 5, 2014. REUTERS/Eric Gaillard/Files
Oil prices tumbled on Thursday after another big weekly
build in U.S. crude inventories and a possible rise in Saudi output stoked
worries about oversupply.
U.S. crude stocks rose by 14.3 million
barrels last week, data from industry group the American Petroleum Institute
(API) showed after Wednesday's settlement, compared with analysts' expectations
for an increase of 3.2 million barrels.
If U.S. Energy Information
Administration (EIA) data due at 1600 GMT confirms the large build, it would be
the biggest weekly addition in barrels since such data became available in
1982.
The API and EIA reports are a day late
this week because of a U.S. holiday on Monday.
At 0843 GMT, benchmark Brent crude
futures for April were down $1.67 at $58.86 a barrel, extending declines from
Tuesday's two-month high of $63.
U.S. crude for March delivery, which
expires on Friday, was down $2.05 at $50.09 a barrel after dipping to an
intraday low of $49.97.
Trading was quiet in Asian hours as
markets in China and other nations were closed for the Lunar New Year holidays.
"The inventories were the trigger
for the sharp correction lower," Carsten Fritsch, an oil analyst at
Commerzbank in Frankfurt, said. "The focus is again back on the oversupply
- the big question is for how long?"
The market has tended to retreat after
swelling U.S. crude inventories, but then rally after falling U.S. rig-count
numbers, which come out every Friday.
"A big build of 7 to 9 million
barrels would be enough to push prices lower," Fritsch said, looking ahead
to the EIA data. "But tomorrow we could see a recovery in expectation of
another sharp drop in the rig count."
At the same time, production from the
world's biggest exporter Saudi Arabia may be increasing to near 10 million
barrels per day, consultancy PIRA said on Wednesday.
The estimate suggests the country is
cleaving to the strategy of protecting market share rather than cutting
production to boost prices.
LONDON (Reuters) By Claire Milhench- Yahoo Finance
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