London: Oil eased to below $77 a barrel on Wednesday, falling from a two-week high, as a report showing a surprise increase in US crude inventories countered support from firmer equities.
US crude stockpiles rose by 1.7 million barrels, industry group the American Petroleum Institute reported on Tuesday. Analysts had expected stocks to fall by 1.4 million barrels.
US crude fell 42 cents to $76.73 a barrel at 0930 GMT. It reached a two-week intraday high of $77.37 on Tuesday. Brent crude was down 27 cents to $76.38.
“From a fundamental point of view, another leg down is more likely than a strong price increase,” said Eugen Weinberg, analyst at Commerzbank in Frankfurt.
Equities offered some support. World stocks hit a three-week high after Intel’s forecast-beating quarterly results raised expectations of strong earnings in the second quarter.
“The oil market is going to be taken for a ride to a large degree by what happens in equity markets,” said Toby Hassall, an analyst at CWA Global Markets in Sydney.
Investors often see strength in equity markets as a sign of wider economic health and an indication that future demand for oil and energy will rise.
Oil in New York was just below its 200-day moving average at $77.39, a level analysts who study past price moves to predict direction said needed to be breached for prices to rally further.
“The line to conquer for the bulls today will be the resistance of the 200-day moving average,” said Olivier Jakob of Petromatrix.
“We continue to believe that sustainability above $80 will be difficult until (there is) a true visible change in the fundamental data.”
Traders will be looking to the weekly supply report from the US government’s Energy Information Administration due at 1430 GMT to see if the inventory build reported by the API is confirmed.