Oil Dips on High Inventories

U.S. crude oil price dipped on Wednesday as crude inventories rose more than expected. But Brent crude rose on fears caused by continued violence in Libya.

The Energy Information Administration reported on Wednesday that U.S. crude stocks rose by 2.52 million barrels to 348.9 million in the week ended March 4, far beyond the market expectation of a 1-million-barrel increase.

And according to the report, the crude inventories at Cushing, Oklahoma, the delivery point for New York crude benchmark, added 1. 69 million barrels to 40.3 million last week, the highest level since the data began to be gathered.

High supply led oil to the falling path, but the losses were limited by the more-than-expected draw of gasoline and distillate inventories, indicating strong demand. Last week, the gasoline inventories fell a very steep 5.5 million barrels for the third straight heavy draw and distillate inventories fell 4.0 million barrels for a fourth straight draw.

Meanwhile in London, the Brent crude rose as violence got intensified in Libya. Libyan National Oil Corporation Chairman Shukri Ghanem said that because of the continuing clashes, more than two-thirds of Libya's oil output has been shut down. The premium of Brent over New York crude benchmark spread again to above 11 dollars.

Light, sweet crude for April delivery dipped 64 cents to settle at 104.38 dollars a barrel on the New York Mercantile Exchange. But Brent crude rose 2.88 dollars to settle at 115.94 dollars a barrel on the ICE Futures exchange.