NEW YORK: Crude oil prices fell modestly on Wednesday as traders weighed a critical build-up in stockpiles in the United States, the world's largest oil consumer. New York's main contract, light sweet crude for May, settled at $104.27 dollars a barrel, losing 52 cents from Tuesday's closing level. In London, Brent North Sea crude for delivery in May shed three cents to close at $115.13 a barrel. Crude futures were under pressure from signs of slowing demand in the US amid.
The US government's weekly report Wednesday on petroleum reserves showed an unexpectedly sharp increase in crude oil stocks. The US Department of Energy (DoE) said that crude inventories rose by 2.9 million barrels last week, almost double market expectations and adding to strains on the country's key oil storage facility in Cushing, Oklahoma.
"Worryingly, 1.7 million barrels of these crude stocks found their way to Cushing, pushing inventories there up to 41.9 million barrels, a record high and a level that may begin to jeopardize deliveries into the May contract," said Nic Brown, head of commodities research at Natixis.
The Cushing depot stores the West Texas Intermediate crude that serves as the benchmark futures contract on the New York Mercantile Exchange.
The market kept an eye on pro-democracy unrest in oil-exporter Libya and other Arab countries that have supported higher oil prices in recent weeks.
On Wednesday, Libyan rebels were driven back by the superior firepower of leader Moamer Qadhafi's forces, yielding most of the ground their recent advances had secured, including the key oil town of Ras Lanuf.
Libya produced 1.69 million barrels a day before the unrest, according to the International Energy Agency. However, output has plunged to a near-standstill amid the fighting.
On Tuesday, crude oil prices rallied, ending three days of losses, as traders reacted to news that Qadhafi loyalists were winning back ground.
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