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Laura Banks in Markets and everything in & between!,

Oil retreats from highs as inventory data show huge build

Benchmark U.S. crude-oil futures headed solidly lower in early electronic trade Wednesday, giving away a chunk of the gains made in a monster rally the previous day as inventory data showed more oil on hand than expected.

West Texas Intermediate crude for March CLH5, -2.90% was down $1.57, or 3%, at $51.47 a barrel by early European trading hours.

The retreat took a sizable bite out of the contract’s 7% surge in regular New York Mercantile Exchange trade Tuesday, with analysts citing hope that a cut in U.S. production would whittle down crude stockpiles.

But such hopes were dampened, at least for the short term, as American Petroleum Institute data released after the Nymex close reportedly showed weekly inventories rising by more than double what the market had expected.

Crude stocks for the week ended Jan. 30 increased to the tune of 6.1 million barrels, analysts cited the API as saying, compared to a consensus forecast for a rise of just 2.8 million barrels, according to a Platts survey.

Michael Kitchen