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Oil prices dip as US stock-build drags, China strategic reserves fill
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[SINGAPORE] Crude oil futures fell on Wednesday, pressured by ballooning US storage volumes and more evidence that China's strategic reserves could nearly be full.
US WTI crude was down 43 cents at US$47.08 a barrel at 0728 GMT, while Brent oil futures dropped 29 cents to US$54.82 a barrel.
The bigger fall in US prices came as American crude stocks were expected to extend their long streak of weekly builds. "US crude stocks will build through May ... (which) should support bearish sentiment for now," Morgan Stanley said in a note on Wednesday, adding that there was still plenty of storage capacity left for inventory gains.
A poll of eight analysts - taken ahead of weekly reports from industry group the American Petroleum Institute (API) and the US Energy Information Administration (EIA) - forecast a crude stock build of 5.1 million barrels on average last week.
The API report on Tuesday showed a slightly smaller build in US crude stocks at 4.8 million barrels for last week. Any build from the more closely watched EIA figures, due later on Wednesday, would confirm US crude stockpiles have hit a record for an eleventh straight week.
Strengthening European and US economic data offered Brent contracts some support, but a drive upwards was prevented by comments from a Sinopec trading executive that China's strategic petroleum reserves (SPR) were reaching current capacity.
China has been taking advantage of cheap oil to build up its SPRs, which helped push its imports to record highs late last year despite an economy growing at its lowest pace in 25 years, but existing capacity is now reaching its limit, capping China's import needs until new facilities are completed.
In Japan, commercial weekly crude stocks were down 2.8 per cent at 82.87 million barrels. The year-on-year change was a drop of nearly 8 per cent.