SINGAPORE: Brent crude eased towards $126 on Wednesday as expectations for a build in US crude inventories offset improving economic sentiment in the world's top oil consumer.
Brent crude fell 20 cents to $126.02 a barrel by 0245 GMT, after settling at an 11-month high of $126.22 on Tuesday. US crude eased seven cents at $106.64.
"The US economy seems more buoyant, so that is keeping the market up," said Tony Nunan, a risk manager at Mitsubishi Corp. "What will bring oil prices off is if we get strong builds in inventories. Supply seems to be sufficient, with OPEC producing at high levels to make up for any shortfall."
The US government's Energy Information Administration is expected to report later on Wednesday the fourth straight rise in weekly crude oil inventories.
US commercial crude oil stockpiles were forecast to have climbed 1.7 million barrels, according to a Reuters survey of analysts. Gasoline stocks were expected to be down 1.0 million barrels, while distillates to have fallen 1.3 million.
The industry group American Petroleum Industry on Tuesday estimated US crude inventories rose 2.8 million barrels in the week to March 9.
Increasing US oil supplies could slow the market's recent rally, with Brent up more than 17 percent and US crude up nearly 8 percent so far this year.
Bullish sentiment has been fueled by rising hopes of a US economic recovery and tensions between Iran and the West over the OPEC producer's nuclear programme.
The US central bank slightly upgraded its economic outlook on Tuesday, saying it expected "moderate" growth over coming quarters and a gradual decline in the unemployment rate, although it said the jobless rate "remains elevated".
US retail sales posted their largest rise in five months in February, data showed on Tuesday, reflecting growing confidence by Americans to purchase goods.
Top exporter Saudi Arabia and other Gulf producers say surging oil markets are beyond their control and prices could spike higher unless tensions between the West and Iran subside.
A majority of Americans would support US military action against Iran if there were evidence that Tehran is building nuclear weapons, even if such action led to higher gasoline prices, a Reuters/Ipsos poll showed on Tuesday.
Comments
Comments are closed for this article.