Oil eased below $106 a barrel on Wednesday after U.S. crude oil stocks swelled to the highest level in more than two decades and dented the outlook for demand in the world’s top consumer.
According to Reuters report Wednesday, Brent crude futures slid 61 cents to $105.62 a barrel by 1221 GMT, while U.S. crude fell 55 cents to $93.65. Data from industry group the American Petroleum Institute showed a sharp rise of 5.1 million barrels in crude inventories last week, far higher than forecasts of a 1.5 million-barrel rise.
The U.S. Energy Information Administration (EIA) later on Wednesday could show a rise of 1.4 million barrels, according to a Reuters poll of analysts.
“The actual physical demand, as evident from the wet barrels market, remains subdued,” said VTB Capital oil and commodities strategist Andrey Kryuchenkov.
OPEC noted the weaker consumption by marking down its forecast for global growth in oil demand in 2013. The move by the Organization of the Petroleum Exporting Countries in a monthly report follows a similar downward revision by the EIA.
“After a few days of short covering the oil complex is starting today’s session on the defensive after a bearish API fundamental snapshot along with a weak demand projection by the EIA,” said Dominick Chirichella of Energy Management Institute. “The fundamentals are becoming more bearish but the technicals are improving slightly.” Oil had been supported earlier in the session by China’s import growth and simmering tension in Iran and North Korea.
