Oil market slide on oversupply woes

[LONDON] World oil prices fell on Thursday, after solid gains the previous day, as dealers fretted again over swelling US crude inventories adding to the global supply glut.

European benchmark Brent North Sea crude for April delivery dipped 63 cents to US$61.00 per barrel in London late afternoon deals.

New York's West Texas Intermediate (WTI) for April dived US$1.72 to US$49.27 a barrel.

The US government's Department of Energy (DoE) said Wednesday that crude inventories rose 8.4 million barrels in the week ending February 20 to a record 434.1 million barrels, more than double the increase expected.

"There are modest signs of a recovery in global demand from the likes of Europe and China - but in the United States, stockpiles are increasingly rapidly as supply still outstrips demand," said CMC Markets analyst Jasper Lawler.

Crude futures had rebounded sharply Wednesday as traders focused on positive aspects of the weekly US energy report.

The DoE reported that stockpiles of distillates, which include diesel and heating fuel, slid 2.7 million barrels last week, while gasoline reserves sank by 3.1 million, signalling solid demand.

Analysts said prices were also supported Wednesday by upbeat comments from Ali Al-Naimi, the oil minister of major oil producer Saudi Arabia.

Oil demand is growing and the market has turned "calm", Al-Naimi told reporters after a speech at a conference in the kingdom on Wednesday, Bloomberg News reported.

Saudi Arabia is the biggest and most influential member of the Organization of the Petroleum Exporting Countries (Opec), which in November decided to maintain output levels despite a global oversupply.

The move had sent prices tumbling to six-year lows of just over US$40 at the end of January, before recovering slightly following a drop in US oil rig utilisation and reduced future investments by oil majors.

Elsewhere, investors are also keeping a close watch on Greece's debt crisis as well as rising violence in oil producer Libya.

"With temporary resolution of the Greek crisis and significant drop in production from Libya due to escalation of tensions, risk of sharp fall in prices during the next two weeks is limited," said Sanjeev Gupta, head of the Asia-Pacific Oil & Gas practice at professional services organisation EY.

AFP