Oil prices dip as US inventory build drags

Oil prices dipped on Wednesday as ballooning US storage volumes pressured prices, a trend some analysts said they expected to continue for another two months.

Brent oil futures were trading at $55.06 a barrel at 1038 am, down five cents, while US West Texas Intermediate crude was at $47.36 a barrel, down 15 cents.

For Brent, strengthening European manufacturing data lent contracts some support, preventing steeper price falls.

The bigger fall in US crude prices came as American crude stocks appeared to extend their long streak of weekly builds.

"US crude stocks will build through May... (which) should support bearish sentiment for now," Morgan Stanley said in a note on Wednesday. It added that there was still plenty of storage capacity left for inventory gains.

A poll of eight analysts - taken ahead of weekly reports from industry group the American Petroleum Institute (API) and the US Energy Information Administration (EIA) - forecast a crude stock build of 5.1 million barrels on average last week.

The API report on Tuesday showed a slightly smaller build in US crude stocks at 4.8 million barrels for last week. Any build from the more closely watched EIA figures due out later on Wednesday would confirm US crude stockpiles have hit a record for an eleventh straight week.

In Japan, commercial weekly crude stocks were down 2.8 per cent to 82.87 million barrels. The year-on-year change was a drop of nearly 8 per cent.

(Reuters)