Oil down to near $103 after mixed US supply report

[May 11, 2011]  LONDON (AP) -- Oil prices slipped to near $103 a barrel Wednesday as traders weighed mixed signals about the strength of energy demand in the U.S., the world's largest economy.

By early afternoon in Europe, benchmark crude for June delivery was down 51 cents to $103.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.33 to settle, or 1.3 percent, at $103.88 on Tuesday.

In London, Brent crude for June delivery was down 20 cents to $117.43 a barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories rose 2.9 million barrels last week, more than the increase of 1.6 million barrels predicted by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

However, inventories of gasoline, which have dropped 11 straight weeks, fell by 295,000 barrels last week, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data -- the market benchmark -- later Wednesday.

In the meantime, its downward revision of estimates for oil consumption weighed on markets.

The EIA now expects global demand for oil to grow by 1.4 million barrels a day in 2011, about 120,000 barrels a day less that it forecast a month ago.

The forecast "has temporarily stopped the price recovery," said a report from Commerzbank in Frankfurt.

Oil prices have swung sharply since the beginning of May, dropping 15 percent last week before rebounding about 6 percent so far this week. Investor concern that flooding on the Mississippi River could damage refineries and disrupt fuel shipments helped push crude higher Tuesday.

The flooding is the latest in a series of events that have rocked oil markets this year, including political uprisings throughout North Africa and the Middle East and the violent conflict in Libya.

"It has been a rare and strange year since the first ripple of discontent in Tunisia," Cameron Hanover said in a report. "And events that have happened since have only magnified the volatility of a nervous and jittery market."

In other Nymex trading in June contracts, heating oil added 0.47 cent to $3.0059 a gallon and gasoline fell 5.02 cents to $3.3295 a gallon. Natural gas futures were down 0.7 cent at $4.239 per 1,000 cubic feet.

[Associated Press; By PABLO GORONDI]

Alex Kennedy in Singapore contributed to this report.

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