Investing.com - U.S. crude oil inventories rose more than expected last week, the Energy Information Administration said in its weekly report on Wednesday.
The EIA data showed that crude oil inventories rose by 7.07 million barrels in the week to March 1.
That was compared to forecasts for a stockpile build of 1.20 million barrels, after a decline of 8.65 million barrels in the previous week.
The EIA report also showed that gasoline inventories fell by 4.23 million barrels, compared to expectations for a draw of 2.08 million barrels, while distillate stockpiles decreased by 2.39 million barrels, compared to forecasts for a decline of 1.44 million.
U.S. crude prices pared losses slightly after the data release, falling 1.61% at $55.65 a barrel by 10:34 AM ET (15:34 GMT), compared to $55.62 prior to the publication.
London-traded Brent crude futures lost 0.62% to $65.45 a barrel, compared to $65.40 ahead of the release.
Despite Wednesday’s decline, crude has rallied more than 20% this year - its best start since 1984, according to Dow Jones Market Data - amid indications that OPEC-led output cuts have helped tighten an oversupplied market. But weakness has been registered on concerns over a global economic slowdown, which threatens demand.
The OECD once again cut forecasts for the global economy for this year and next.
"High policy uncertainty, ongoing trade tensions, and a further erosion of business and consumer confidence are all contributing to the slowdown," the OECD said in its economic outlook released earlier on Wednesday.
A tug of war between OPEC-led cuts and a weakening Chinese economy has been pulling at crude prices.
“From well-timed interviews and speeches hitting the media airwaves to production cuts that are squeezing the market, (OPEC de facto leader) Saudi Energy Minister Khalid al-Falih has done all he can to give oil its best recovery rally in years. Yet, an unhinged Chinese economy may unravel much of his hard work,” Investing.com analyst Barani Krishnan said.
Krishnan also warned that OPEC and allies faced challenges from the likes of Chevron (NYSE:NYSE:CVX) and Exxon Mobil (NYSE:NYSE:XOM), which on Tuesday announced plans to churn out close to 1 million barrels of shale oil each per day in the Permian Basin, one of the most prolific oil basins in the U.S.
“Such forecasts raise questions on how much more the Saudis might have to cut in the future to balance the market when demand falls short of expectations,” he concluded.