London: Oil paused around $1.30 (Rs59.28) lower after slipping under $81 on Wednesday as investors waited to see if the US Energy Information Administration (EIA) figures would confirm a bearish build-up in crude stocks.
Sentiment was undermined further by concerns over the fragility of a global recovery as Portugal’s sovereign credit rating was downgraded, underlining worries that Greece’s debt problems could move to other euro zone areas.
US crude oil futures for May touched a low of $80.35 a barrel. It has traded between $69 and $84 so far this year. London’s ICE Brent for May was down $1.37 at $79.33 after earlier dipping to a low of $79.20.
US crude stockpiles jumped 7.5 million barrels in the week ended 19 March, the American Petroleum Institute said on Tuesday.
Supplies of distillates, including heating oil and diesel, fell 2.5 million barrels while petrol stocks changed little.
“It was a huge build in crude stocks,” said Amrita Sen of Barclays Capital in London. “It’s the primary piece of information the market is trading on ahead of the energy department figures.”
Fitch Ratings cut Portugal’s sovereign credit rating by one notch to AA- in a move that put further pressure on the euro against the dollar.
Data in the euro zone painted a mixed picture, with manufacturing activity growing in March at its highest level since the end of 2006 but industrial orders in January falling, underscoring the fragility of the economic recovery.
Dollar fluctuations, however, are seen by analysts as having less impact on crude oil prices as fundamental concerns come further into focus.
Petromatrix GmbH analysts said they would look to the petrol crack—the theoretical premium refiners get for making gasoline from crude—for crude price indications this week.
The gasoline crack touched a high for 2010 around $14.60 earlier this week and is now just under $13. Demand often rises in summers as drivers go on holidays.
“With plenty of stocks and relative values that are favouring (making petrol), the US consumer will have to drive a long way before putting the supply capacity at risk,” said Petromatrix in a report.