Oil fell by over a dollar towards $48 a barrel this morning, adding yesterday's 3.7 per cent loss on falls for equities and after weekly data showed US crude inventories up far more than expected.
Crude oil stockpiles rose by 6.9 million barrels last week, the American Petroleum Institute (API) said late last night, far exceeding analyst forecasts for a 2.1-million-barrel build and sending prices sharply down in electronic trading.
The market has lost 6.6 per cent over the past three sessions, also dragged down by stock markets that are taking a hammering at the start of what is expected to be a grim earnings season.
US light crude for May delivery fell 98 cents a barrel to $48.17 by 2.40am, after falling as low as $48.10. London Brent crude fell 57 cents to $50.65.
The API data also showed gasoline stocks up by 2.9 million barrels and distillates down by 2.3 million barrels.
"There is optimism that demand will start increasing in the medium term but the large inventories will prevent prices from rising much above $50 a barrel," said Toby Hassall, head of research at Commodity Warrants Australia.
The Energy Information Administration -- whose data is generally seen as more comprehensive - will release its weekly report at 3.30pm today, and the market will watch for more signs of rising stocks.
A Reuters poll forecast an average build of 1.9 million barrels for crude stocks, already at their highest since July 1993 as a weak economy eats into demand.
Stock markets, which investors are watching for clues as to when oil consumption might rebound, are continuing to signal a dismal economic outlook, and the first signs from the earnings season were bearish.
Reuters