Oil prices dipped in Asian trade on Wednesday bucking a recent trend as the market braced for a larger-than-expected rise in crude inventories, analysts said. New York’s main futures contract, light sweet crude for delivery in March, fell 42 cents to 76.81 dollars a barrel. London’s Brent North Sea crude for March delivery was down 31 cents to 75.75 dollars. Analysts said rallies on the oil market experienced over the past few days had been stemmed by numbers released by the American Petroleum Institute (API) on Tuesday indicating a build-up in US crude stockpiles.
“I think it’s because of the API (American Petroleum Institute) numbers…. They showed a build-up of 4.7 million barrels of crude which was unexpected,” said Clarence Chu, an oil trader with Hudson Capital Energy in Singapore.
Analysts had expected US inventories to rise by a median of only 400,000 to 500,000 barrels, Chu added.
Market sentiment had been buoyant as equities markets put in strong performances and manufacturing data from the United States hinted at a global economic recovery.
But the market was spooked when the API report was released late Tuesday. “The minute the API number was released, the market dropped by around 30 cents,” Chu said.
The API report serves as the precursor to the US Department of Energy’s weekly inventories report out every Wednesday, which provides a snapshot of global energy demand by showing the size of crude stockpiles in the world’s largest energy consumer.
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