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[LONDON] Oil slipped below US$49 a barrel on Wednesday after an industry report said US crude stocks rose by the most on record last week, and as a firmer dollar added to pressure on prices.
The American Petroleum Institute said late on Tuesday US crude stocks jumped by a massive 12.7 million barrels last week, triple the volume expected, and including a 2 million barrel increase at US crude delivery point Cushing, Oklahoma.
If confirmed by official data from the US Energy Information Administration at 1530 GMT on Wednesday, the weekly rise, excluding additions to the Strategic Petroleum Reserve, would be the biggest since records began in 1982, according to EIA data. It follows a 10.1 million barrel build last week.
"Crude oil stocks in the US still appear to be growing incessantly," Commerzbank analyst Carsten Fritsch said.
Brent crude oil for March delivery was down 68 cents at US$48.92 a barrel by 1505 GMT, having touched an intraday low of US$48.79. It hit a near six-year low of US$45.19 a barrel two weeks ago.
US crude for March delivery fell US$1.28 to US$44.95 a barrel, and hit an intraday low of US$44.92.
Fast growing US shale output has pushed oil prices almost 60 per cent lower since June, with losses accelerating after the Organization of the Petroleum Exporting Countries said it would not cut output in a bid to preserve its market share.
Analysts at Goldman Sachs, widely seen as one of the most influential banks in commodity markets, said in a note published on Jan 27 they expect US crude, also known as WTI, to remain near US$40 a barrel in the first half of this year.
"(That) should slow supply growth and balance the global oil market by 2016," the Goldman analysts said. "We then expect oil prices to move to the marginal cost of production," which the bank pegged at US$65 a barrel for WTI and US$70 a barrel for Brent.
Brent has consolidated in a narrow range just below US$50 in the past two weeks as traders assess whether further price falls would push too many small producers out of the market.
Crude futures settled up more than 2 per cent on Tuesday, when the dollar index posted its biggest one-day fall since early October. But the dollar firmed on Wednesday and remains up by more than 15 per cent in the last year.
A strong US unit makes dollar-priced commodities more expensive for buyers holding other currencies, and has been an additional factor in oil's near 60 per cent collapse in the last seven months.