Oil prices slip as US energy inventories climb
Oil prices fell on Wednesday, wiping out earlier gains, as traders reacted to rising US inventories that indicated weaker demand in the world's biggest energy consuming nation.
Oil also took a hit from falling European equity markets and mounting financial market jitters surrounding the Greek debt crisis.
New York's main contract, light sweet crude for delivery in June, fell 75 cents to 83.10 dollars a barrel.
London Brent North Sea crude for June slipped six cents to 84.74 dollars.
The US government's Department of Energy (DoE) announced Wednesday that American crude reserves increased 1.9 million barrels in the week ending April 16.
Market expectations had been for a drop of 200,000 barrels, according to analysts polled by Dow Jones Newswires.
The DoE said gasoline or petrol stockpiles soared 3.6 million barrels last week, more than forecasts for a small gain of 300,000 barrels.
Distillates, which include diesel and heating fuel, rose 2.1 million barrels whereas analysts had expected an increase of 900,000 barrels.
Torbjorn Kjus, oil market analyst at DnB NOR Markets, described the weekly report as "bearish," indicating that it would send prices lower.
Oil rose earlier on Wednesday as European governments reopened their airspace to more flights following a shutdown caused by ash from an erupting volcano in Iceland.
"Oil prices rallied on the partial reopening of European airspace, which will improve demand for aviation fuel," said analyst Peter Bassett at Westhouse Securities.
Britain lifted a flight ban on its airspace late on Tuesday, following Belgium, France and Germany and others in easing restrictions introduced after the volcano spewed a huge dust cloud across the continent.
On Monday, oil tumbled by almost two dollars amid concerns over fraud charges against Wall Street icon Goldman Sachs and the impact of the volcanic ash crisis.
They bounced back two dollars in New York trade on Tuesday amid optimism about the state of the economy and the prospect of transatlantic air travel resuming.
Markets reacted to a pickup in jet fuel demand as more planes took to the skies, while the appearance of Goldman's stellar first-quarter earnings also lifted sentiment.
© 2010 AFP