Oil down in Asia on large US stockpile gain

Singapore – Oil fell in Asia Thursday as a larger than expected rise in US crude inventories eroded overnight gains sparked by Fed forecasts of a pick-up in growth, analysts said.

New York’s main contract, light sweet crude for delivery in June, fell 10 cents to $104.02 per barrel. Brent North Sea crude for June delivery shed 20 cents to $118.92.

“Oil prices have edged down some… primarily because the market is reacting to the oil inventory report from the US,” said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.

“The inventory for crude rose four million barrels, the market expectation was only for 1.5 million barrels,” he told AFP.

Over the past four weeks, crude inventories have added 23 million barrels, pointing to slack energy demand in the massive economy.

Crude’s price slip came on the back of overnight gains sparked off by Federal Reserve predictions of a gradual pick-up in US economic growth.

Winding up a two-day meeting in Washington, central bank policymakers left the central bank’s key interest rate near zero, predicting that economic growth would remain moderate over the coming quarters and then “pick up gradually”.

“When they (Fed policymakers) say they are looking for growth to be gradually picking up, that gives you a better prospect for (oil) demand growth,” said David Bouckhout at TD Securities.