Oil dips on hike in U.S. refined fuel stocks
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NEW YORK (Reuters) - Oil slipped in choppy trade on Wednesday as an increase in refined fuel stockpiles in the United States offset a sharp drop in supplies of crude.
U.S. crude settled down 66 cents at $95.67 a barrel, while London Brent crude fell $1.17 to $94.37.
The U.S. Energy Information Administration said U.S. gasoline supplies jumped 5.3 million barrels while distillates inventories gained 1.5 million barrels, far exceeding analyst expectations.
Tempering the bearish impact of the report, the EIA also said that crude stocks tumbled by 6.8 million barrels last week to the lowest level since October 2004.
"The larger than expected crude draw was simply offset by a larger-than-expected product increase with the huge hike in gasoline stocks of 5.3 million barrels drawing particular attention," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
Oil prices are below last week's all-time peak of $100.09 a barrel, pressured in part by lingering fears that a U.S. economic slowdown will cut into energy demand.
"I think over the mid-term, looking ahead for the rest of the year, we would expect the price to soften. Our target price now for the year would be in the $80-$85 range," said Tom Nelson, oil analyst at Guiness Atkinson Funds.
Gold and other commodities also have started the year around record levels, with investment funds diversifying their portfolios to hedge against declining equity markets.
"Commodities remain supported by investment and asset allocation flows, but the risk is increasing for a correction once the asset allocations dry up," said Olivier Jakob of Petromatrix.
Equity markets have moved in the opposite direction, concerned by the slowing U.S. economy. The U.S. stock market has had its worst-ever five-day start to the year.
Oil prices were in negative territory earlier in the session on a Goldman Sachs report that forecast a U.S. recession hitting this year.
(Additional reporting by Matthew Robinson in New York; Randy Fabi in London; Yaw Yan Chong in Singapore)
