Crude fell on Wednesday, with Brent tumbling by more than $1 but U.S. crude seeing modest declines, as traders ignored an unexpected drop in U.S. oil inventories amid expectations that Libya's bottlenecked oil hubs would soon reopen.
The slide began on Tuesday with news that a rebel group in eastern Libya had agreed with the government to end its seizure of oil ports, raising hopes for an end to an eight-month stalemate that has dried up state income. On Wednesday, a rebel official told Reuters they would reopen the smaller Zueitina oil port first, once they have clinched a final deal with the government. He said talks with the government were ongoing.
was down about $1, trading over $104 a barrel and its lowest since Nov. 8. U.S. crude pared early losses to end 12 cents lower at $99.62 a barrel. The May contract briefly fell to parity with the June contract, threatening to move to a discount, or contango, which signals ample supplies and weak demand.
The spread between Brent and U.S. oil, or WTI, has also contracted to about $5.38, its narrowest since October led by declines in Brent. Commodities such as oil are priced in dollars, which means a stronger greenback makes them more expensive to importers.
U.S. crude inventories fell last week against analysts' expectations of a build, while stocks of gasoline decreased and distillates rose, data from the Energy Information Administration (EIA) showed on Wednesday. Crude inventories fell 2.4 million barrels in the week to March 28, compared with analyst expectations for an increase of 1.1 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell 1.2 million barrels.
Adding to the wider concerns about demand, easing political concerns over Ukraine have sapped some support for Brent, the international benchmark.
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