London: Brent crude oil fell towards $113 on Wednesday after data showed a bigger-than-expected rise in US crude stockpiles, underlining worries about weakening global demand for oil.
Data from the US Energy Information Administration (EIA) showed crude stocks in the world’s largest oil consumer rose 2.86 million barrels last week, more than analysts’ forecasts for a rise of 1.7 million barrels.
The report underscored figures from the American Petroleum Institute on Monday that also showed a rise in US crude inventories.
December Brent was down 93 cents to $113.07 a barrel by 08:55 pm, after falling to a low of $112.80. US oil for November was down 28 cents to $91.81 after touching a low of $91.55.
The November Brent contract, which expired on Tuesday, closed 73 cents lower at $115.07, while December settled 40 cents lower at $114.00.
“The build in crude oil and gasoline seems to have driven the market lower,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
Adding to an improved supply picture, Saudi Arabia pumped around 9.77 million barrels per day (bpd) of crude oil in September, an industry source said.
The kingdom appears to be keeping its pledge to ensure global markets are well supplied with oil, as a Reuters analysis of US import data shows sales to the world’s top consumer have dipped less than 10% from a four-year high hit this year.
“We still have fairly low demand and still fairly high production, especially from the Opec side,” said Andy Sommer, oil market analyst with EGL in Dietikon, Switzerland.
“From that mixture, when you look at demand-supply balance in the world and look at the latest inventory numbers for oil, you see that the picture is still a bit bleak,” he said.
Brent gained in early trade after Moody’s Investors Service affirmed its investment grade rating on Spain, helping to ease investor worries that the crisis in the euro region is worsening.
Oil was also supported by supply concerns, as the European Union slapped fresh sanctions on major Iranian state companies in the oil and gas industry and strengthened restrictions on the central bank.
The US and the EU are putting pressure on Iran to stop its nuclear programme, which they suspect has a military purpose. Tehran says it needs the technology to generate electricity.
“The battle continues between the negativity from the slowing of the global economy compared to what global stimulus programmes might do to the economy going forward, while geopolitics has continued to remain an issue for market participants,” said Dominick Chirichella of New York’s Energy Management Institute. Reuters