Oil Prices Fall On Huge Build In US Crude Stocks

Oil prices fell on Wednesday in the wake of industry data that showed a huge build in US crude stockpiles that were already at a record high.

Early losses were trimmed, however, as the market discounted the data in line with recent sentiment that has seen crude prices push higher in the last fortnight since hitting 12-year lows under $30 a barrel between late January and mid-February.

London Brent crude for May delivery was down 12 cents at $36.69 a barrel by 0436 GMT, after settling up 24 cents on Tuesday. The contract touched an intraday peak of $37.25 on Tuesday, the highest since Jan. 5 and up 37.5 per cent from a 12-year low hit in late January.

NYMEX crude for April delivery was down 40 cents at $34 a barrel, after settling up 65 cents on Tuesday on the back of a firmer close on Wall Street. US crude hit a one-month high on Tuesday.

US crude inventories rose by 9.9 million barrels last week, data from the American Petroleum Institute showed after Tuesday's settlement. That was well above a 3.6-million barrel increase expected by analysts in a Reuters poll.

The surprise jump initially pushed US crude down as much as 60 cents on worries that official data from Energy Information Administration (EIA) due later in the day would show a large build similar to the industry numbers.

"Inventories are already at a historical high and with it continuing to inch upwards, the market has been taking a nonchalant behaviour towards increasing inventories," Daniel Ang at Phillip Futures said in a note.

Global oil prices appear to have bottomed out and are expected to rise through this year as investment cuts help to reduce a supply glut, a senior analyst at the International Energy Agency said on Tuesday.

"Sentiment has clearly shifted for commodities in the last fortnight," ANZ bank said on Wednesday. "Both crude oil and iron ore prices hit a one-month high overnight. The price action in oil adds to the case that the bottom in the crude oil market is now in place."

Crude prices were supported by Russian Energy Minister Alexander Novak's remarks that oil firms in the country support a pledge to average production this year at January's levels.

Russian President Vladimir Putin spoke of "more radical" measures to balance the global oil market, on top of a production freeze plan jointly pursued by Moscow with Saudi Arabia, Qatar and Venezuela.

(Reuters)