Oil Dips Below $62 on U.S. Inventory

U.S. crude stocks rose 5.5 million barrels last week. Industry leaders say demand will push prices higher.

Oil prices dipped under $62 a barrel on Wednesday after industry data showed a build in U.S. crude inventories for the 15th straight week, adding to concerns of a global supply glut.

The American Petroleum Institute (API) said on Tuesday that U.S. crude stocks rose by 5.5 million barrels last week, higher than the 2.9-million-barrel build expected by analysts in a Reuters survey, to 480.2 million barrels.

Stocks at the key delivery point of Cushing, Oklahoma rose by 572,000 barrels, the API said. Energy markets intelligence firm Genscape said tanks at Cushing were nearly 80 percent full.

Brent crude for June delivery was down 45 cents at $61.63 a barrel by 1015 GMT, while U.S. crude for June delivery fell 51 cents to $56.10 a barrel.

"You have a considerable build in the U.S.," said Olivier Jakob, chief analyst at Swiss-based consultancy Petromatrix.

"There has been a lot of waiting and hoping for the first drop of stocks in Cushing and that has not happened yet," he said.

Official U.S. stocks data will be issued by the government's Energy Information Administration (EIA) at 1430 GMT on Wednesday.

Saudi Arabia said it was ending a month-long military campaign against the Houthi rebels who had seized large areas of Yemen, bringing hope of a political solution to the conflict in the oil-producing region.

Oil prices had gained nearly $10 a barrel this month on tensions in the Middle East and concerns over slowing output growth in the United States, before starting to drop back.

Prices are unlikely to plumb new depths this year, however, leading commodity traders said on Tuesday, citing strengthening demand.

"We will probably see one more dip in the second quarter but prices probably won't go below this year's lows," said Ian Taylor, head of the world's top oil trader, Vitol.

Executive Chairman Gary Ross, of the PIRA Energy Group consultancy, said in an interview: "The world has been focused for the last six months on destroying supply."

"Increasingly the mindset is going to change. They'll have to start thinking about creating supply again, and that's going to mean a lot higher prices than today," he said.

By Himanshu Ojha