Oil: Prices extend losses on US supply surplus

NEW YORK - Oil prices ticked lower on Thursday for the third day in a row as dealers eyed a surplus of crude and gasoline stockpiles in the United States, the world's largest energy consumer.

US light crude slipped 54 cents to US$46.15 a barrel, bringing losses since last week's brush near US$50 to more than 6 percent. London Brent crude fell 48 cents to US$43.53 a barrel.

The slide in prices has accelerated since the US Energy Information Administration reported Wednesday that gasoline stocks rose by 1.6 million barrels in the week to Jan. 28 and were running at a 4 percent surplus over last year.

US crude inventories slipped a shade, but remained nine percent over last year, the EIA report showed.

The higher US stockpiles have helped ease concerns that refiners will have trouble meeting growing demand as gasoline consumption begins to pick up in the spring.

Even so, growth in US fuel demand means inventories have to be bigger to cope with a greater strain, analysts said.

"With demand now starting its seasonal upswing, we expect the US gasoline market to tighten significantly in coming months," said Barclays Capital bank in a report.

The focus of oil traders has begun to shift away from heating oil after private and government forecasters called for an unseasonably mild February and March.

The EIA reported that US inventories of distillate fuels, including heating oil and diesel, fell 2.9 million barrels to stand about 4.5 percent below last year, drawn down by a two-week freeze in January.

Oil producers in the Organisation of Petroleum Exporting Countries are closely watching stock levels, fearing a sharp drop in oil prices if inventories should build too quickly in the second quarter.

Global oil demand typically slows when the Northern Winter ends due to lower heating demand.

Opec agreed on Sunday to leave official production limits unchanged at 27 million barrels per day for the time being, but warned that a cut could be co-ordinated by telephone before the group's March 16 meeting in Iran.

"We will wait normally to March. If there is, before March, a big change in the market we will consult among ourselves," Qatari Oil Minister Abdullah al-Attiyah told a news conference in Oslo where he was signing a gas supply deal.

Opec appears ready to defend oil prices at a floor of about US$40 a barrel for US crude. It cut formal production limits by 1 million bpd from Jan. 1 after prices dipped as low as US$40.25 a barrel in early December.

- REUTERS