LONDON: US crude futures fell below $78 a barrel on Wednesday after industry data showed a surprise build in US crude stocks, raising doubts over demand recovery in the world s largest energy user.
Data from the American Petroleum Institute, released after Tuesday s settlement, showed US crude inventories rose 2.9 million barrels last week, dwarfing the forecast in a Reuters poll for a 400,000 barrel increase.
Fresh direction will come from the more closely watched US Energy Information Administration petroleum report at 1530 GMT.
I think considering how bearish the report was it is not surprising oil is down, said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt
There was nothing bullish in this report.
NYMEX crude for January delivery fell 73 cents to $77.64 a barrel by 1139 GMT, after settling up $1.09, or 1.4 percent, on Tuesday.
Brent crude fell 58 cents to $78.77.
Further doubts over potential oil gains were heightened on Wednesday as prices failed to be spurred on by rallies in other commodities.
Gold hit a record high as the euro rose against the US dollar, fuelling investment interest in the precious metal as an alternative investment. Meanwhile, copper rose to its strongest level in 14 months.
It makes plain the underperformance of oil compared to other commodities like copper and gold, Fritsch said.
Oil has rallied from below $33 last December but has held in a narrow band of $70 to $82 over the past two months. Some analysts see little chance prices will push above the range, given ample supplies and little sign of strengthening demand.
The rub however, is that more good news is being priced in than bad news, suggesting prices could disappoint if the focus swings, ANZ s senior commodities analyst, Mark Pervan said.
The API data also showed distillate stocks rose 1.1 million barrels, defying the forecast that supplies fell 300,000 barrels, while gasoline stocks jumped 3.4 million barrels against the forecast of just a 1.0 million barrel increase.
There were further signs of rising global oil supplies on Wednesday as Russia s Energy Ministry data showed the country s output hit a post-Soviet record for the fourth straight month, retaining its position as the world s top producer ahead of Saudi Arabia. -Additional reporting by Nick Trevethan in Singapore.
