LONDON: Oil prices edged down to hover below $77 a barrel on Wednesday after a surprise hike in crude inventories in the world’s top energy consumer the United States dampened risk appetite for commodities.
US crude inventories jumped 579,000 barrels in the week to June 11 and oil product stocks rose across the board, weekly data from the American Petroleum Institute (API) trade group said on Tuesday.
US crude for July fell 27 cents to $76.67 a barrel at 1026 GMT after trading above $77 a barrel earlier. ICE Brent crude oil for delivery in August was down 5 cents at $77.05 a barrel by the same time.
"When you look at the last data on the API side, it showed an increase in crude oil. We are also looking at a big jump in gasoline stocks and that could be pretty bearish for oil," said Christopher Barret, an oil analyst at Credit Agricole.
A US government inventory report from the Energy Information Administration, deemed by many to be more comprehensive than the API, will be published later on Wednesday and is set to provide further direction.
The report will give clues on demand at the start of the summer driving season when gasoline consumption peaks.
A provisional poll of Reuters analysts showed that crude oil inventories dropped 1.2 million barrels and gasoline inventories rose 200,000 barrels last week.
US weekly retail gasoline demand rose 1.4 percent in the week ended June 11 as prices at the pump continued to dip, but demand was down 2.2 percent year-on-year, the SpendingPulse report said on Tuesday.
While prices were slightly weaker on Wednesday, they were still nearly 20 percent above the 2010 low of $64.24 a barrel struck in late May, helped by better buying appetite for commodities such as oil.
On Tuesday, US crude rose above the 200-day moving average, and analysts expected prices to remain above this key technical support level, currently at around $76.79 a barrel.
"After the (May) correction, prices should be well-supported. There has been a change in risk aversion," said Barret.
The market on Wednesday was also weighing the potential implications of a speech from US President Barack Obama in which he demanded that BP set aside billions of dollars to pay for the Gulf of Mexico oil spill.
While some expect the disaster to be bullish for oil prices in the long term as producers shy away from deepwater drilling, others think the accident could accelerate the shift away from traditional energy sources such as oil.
"Maybe for the long-term oil price it’s bullish, but for the nearby months I don’t see any reason to be bullish or bearish," said Keichi Sano, general manager of research at SCM Securities in Tokyo. –Additional reporting by Alejandro Barbajosa