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 U.S. crude stocks rose by 14.3 million barrels last week, data from
industry group the American Petroleum Institute (API) showed after
Wednesday's settlement, compared with analysts' expectations for an
increase of 3.2 million barrels.
If U.S. Energy Information Administration (EIA) data due at 1600 GMT
(11:00 a.m. EST) confirms the large build, it would be the biggest
weekly addition in barrels since such data became available in 1982.
The API and EIA reports are a day late this week because of a U.S.
holiday on Monday.
At 1112 GMT (06:12 a.m. EST), benchmark Brent crude futures
for April were down $1.52 at $59.01 a barrel, after touching an
intraday low of $58.46 earlier in the session, extending declines
from Tuesday's two-month high of $63.
U.S. crude for March delivery, which expires on Friday, was down
$2.10 at $50.04 a barrel after dipping as low as $49.73.
Trading was quiet in Asian hours as markets in China and other
nations were closed for the Lunar New Year holidays.
"The inventories were the trigger for the sharp correction lower,"
Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt, said.
"The focus is again back on the oversupply - the big question is for
how long?"
The market has tended to retreat after swelling U.S. crude
inventories, but then rally after falling U.S. rig-count numbers,
which come out every Friday.
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"A big build of 7 to 9 million barrels would be enough to push
prices lower," Fritsch said, looking ahead to the EIA data. "But
tomorrow we could see a recovery in expectation of another sharp
drop in the rig count."
At the same time, production from the world's biggest exporter Saudi
Arabia may be increasing to near 10 million barrels per day,
consultancy PIRA said on Wednesday.
The estimate suggests the country is cleaving to the strategy of
protecting market share rather than cutting production to boost
prices.
(Additional reporting by Osamu Tsukimori in Tokyo and Henning
Gloystein in Singapore; Editing by Dale Hudson and William Hardy)
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