Oil slightly lower after Brussels attacks; US stockpile weighs

Oil prices have held up better after the Brussels attacks than many had expected but market watchers are keeping their eyes peeled for any sharp moves that may follow.

U.S. WTI light sweet crude oil price are down 0.8 percent at $41.10 a barrel in early Asian hours after ending the previous session just 7 cents lower at $41.45 a barrel.

European Brent crude oil is down 0.7 percent at $41.50 a barrel after finishing the last session 25 cents higher at $41.79 a barrel.

The losses were smaller than some market observers had expected and many attributed declines to data that showed a rise in U.S. stockpiles rather than developments in Belgium.

"It's impressive that oil did what it did. You would have expected it would do worse due to the shock," Allianz chief economic adviser, Mohamed El-Erian, told CNBC overnight.

Oil prices initially fell on Tuesday due to investor jitters after deadly blasts in Brussels prompted a flight towards safe-haven assets such as gold. But the response was modest.

"When a terrible event happens like what we saw yesterday and what we've seen in recent months, there will be a sort of reaction in the market but they don't know what it means ... what we saw was an immediate reaction but it's hard to tell if it's going to be sustained," International Energy Agency's oil industry and markets head Neil Atkinson told CNBC's Squawk Box.

Market fundamentals usually prevail after the initial reaction, he said.

Oil prices are weighed Wednesday by data from industry group American Petroleum Institute released Tuesday showing a U.S. crude stockpile build of 9 million in barrels in the last week to a record high of 532 million barrels, reported Reuters.

IEA's Atkinson reiterated the organization's view that oil probably bottomed out in end-January at just below $30 a barrel.

"We think the worst is over although there are events that come along all the time that will cause some surprises," said Atkinson.

Oil stocks will likely rise in the first half while the market will move close to balance in the second half of 2016, he added. Supply-demand mismatches are likely to balance in 2017.

The industry is also navigating through uncharted territory amid developments in the U.S. shale industry, which has moved much faster and is proving more resilient than most have expected, he added.

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