Crude hit by demand fears; US oil sinks to five-week trough
Crude fell on Wednesday, with the U.S. contract sliding to a five week low as investors shrugged off curtailed Libyan supply and falling U.S. stockpiles, focusing instead on demand fears.
Brent's premium over U.S. crude rose to more than $14 a barrel, as a build in crude stockpiles at the U.S. contract's delivery point in Cushing, Oklahoma, reported by the U.S. Energy Information Administration (EIA) on Wednesday, overshadowed falling inventories elsewhere in the country.
Crude stocks at Cushing rose by 1.1 million barrels last week, the EIA said, while stocks nationally declined by 2.7 million barrels. That was far less, however, than a 7.3 million barrel country-wide decline reported by industry group the American Petroleum Institute on Tuesday.
Gasoline and distillate stocks, including diesel and heating oil, also rose sharply, developments that analysts say are bearish for crude.
Brent was underpinned by tensions in Libya after a heavily armed eastern autonomy group said on Tuesday it would invite foreign companies to buy oil from seized ports and protect arriving tankers, in defiance of the government in Tripoli, which has vowed to stop them.
Brent crude for delivery in February reversed early gains, trading virtually flat above $107 a barrel, after settling up 62 cents on Tuesday.
U.S. crude fell by $1.34 to settle at $92.33 a barrel, hitting its lowest in 5 weeks. The contract's losses snowballed after the release of the Federal Reserve's latest minutes showed the central bank was ambivalent about scaling back its bond-buying.
For more information on commodities prices, please click here.