Brent slips to $49 on U.S. Crude Stocks
U.S. crude stocks up 12.7 mln barrels last week (API).
Oil slipped to $49 a barrel on Wednesday after an industry report said U.S. crude stocks rose by the most in two decades last week, and as a firmer dollar added to pressure on prices.
The American Petroleum Institute said late on Tuesday that U.S. crude stocks jumped by a massive 12.7 million barrels last week, triple the volume expected, and including a 2 million barrel increase at Cushing, Oklahoma, the delivery point of the U.S. oil contract.
If confirmed by official data from the U.S. Energy Information Administration at 1530 GMT on Wednesday, the weekly rise would be the biggest since March 1994, according to EIA data, and follows a 10.1 million barrel build last week.
"Crude oil stocks in the U.S. still appear to be growing incessantly," Commerzbank analyst Carsten Fritsch said.
On Wednesday, Brent crude oil for March delivery was down 25 cents at $49.35 a barrel by 1148 GMT, having touched an intraday low of $48.79. It hit a near six-year low of $45.19 a barrel two weeks ago.
U.S. crude for March delivery fell 76 cents to $45.47 a barrel, and hit an intraday low of $45.14.
Fast growing U.S. shale output has pushed oil prices almost 60 percent lower since June, with losses accelerating after the Organization of the Petroleum Exporting Countries said it would not cut output in a bid to preserve its market share.
Analysts at Goldman Sachs, widely seen as one of the most influential banks in commodity markets, said in a note published on Jan. 27 they expect U.S. crude, also known as WTI, to remain near $40 a barrel in the first half of this year.
"(That) should slow supply growth and balance the global oil market by 2016," the Goldman analysts said.
"We then expect oil prices to move to the marginal cost of production," which the bank pegged at $65 a barrel for WTI and $70 a barrel for Brent.
Brent has consolidated in a narrow range just below $50 in the past two weeks as traders assess whether further price falls would push too many small producers out of the market.
Crude futures settled up more than 2 percent on Tuesday, when the dollar index posted its biggest one-day fall since early October. But the dollar firmed on Wednesday and remains up by more than 15 percent in the last year.
A strong U.S. unit makes dollar-priced commodities more expensive for buyers holding other currencies, and has been an additional factor in oil's near 60 percent collapse in the last seven months.
By David Sheppard
