Oil prices fell to near $103 a barrel Wednesday after a report showed a larger than expected increase in U.S. crude supplies, which suggested that demand may remain weak.
By early afternoon in Europe, benchmark oil for May delivery was down $1.11 to $102.90 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.22 to settle at $104.01 per barrel in New York on Tuesday.
In London, Brent crude was down 80 cents at $124.06 per barrel at the ICE Futures exchange.
The American Petroleum Institute said late Tuesday that crude inventories rose 7.8 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 1.9 million barrels.
Inventories of gasoline fell 4.5 million barrels last week while distillates tumbled 1.4 million barrels, the API said.
The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.
Also on Tuesday, minutes from a Federal Reserve meeting last month showed the Fed is more optimistic about the U.S. economy than previous public statements, a sign investors took to suggest further monetary stimulus measures to boost economic growth were less likely.
A stronger dollar, which makes crude more expensive for investors using other currencies, also weighed on prices. On Wednesday, the euro was down to $1.3156 from $1.3217 late Tuesday in New York.
Investors will also be closely watching the latest U.S. employment data over the next three days, culminating in Friday's March jobs report. The global oil market will be closed Friday for the Good Friday holiday.
In other energy trading, heating oil was down 1.25 cents at $3.2150 per gallon and gasoline futures added 0.46 cents at $3.40 per gallon. Natural gas fell 1.3 cents at $2.174 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.
- New York Mercantile Exchange
- American Petroleum Institute