LONDON, May 11: World oil prices fell on Wednesday as traders digested a strong rise in US crude inventories and deemed as “bearish” a study by the International Energy Agency that nevertheless forecast higher demand for energy. New York’s main contract, light sweet crude for delivery in June, dropped 57 cents to $51.52 per barrel in early deals.

In London, the price of Brent North Sea crude oil for delivery in June lost 43 cents to $51.00 per barrel. Crude stocks in the United States are at their highest levels since March 2002, according to Wednesday’s weekly government snapshot from the US Department of Energy (DoE).

The DoE said crude oil inventories for the week ending May 6 increased 2.7 million barrels to stand at 329.7 million, beating market forecasts of an increase of 1.5 million. “We’ve known for months that crude stock levels were no problem and they continue to be no problem,” said Societe Generale analyst Deborah White.

“However the fact that crude stocks built 2.7 million barrels is essentially irrelevant because it’s gasoline right now that has the leadership of the oil market.” Gasoline — or petrol — was in focus with the onset of the US summer driving season — when many Americans take to the roads for holidays starting on the US Memorial Day holiday on May 30.

Reserves of gasoline rose by 200,000 barrels to 213.7 million, against expectations of a one-million-barrel increase, the DoE added. “Gasoline stocks built by just 20 per cent of what was expected,” White said.

“It does not change the fact that gasoline stocks are still high... (on the US East coast) they are five percent higher than the five year average.” Market watchers had expected US oil refinery activity to accelerate but instead “the runs were down”, she added.

Meanwhile global oil demand this year was set to be slightly higher than previously expected, as the market readjusted from last year’s demand surge, the International Energy Agency said on Wednesday.

Oil demand was now seen rising by 2.2 per cent this year to 84.3 million barrels per day, the IEA calculated, revising up by 0.1 percentage points its April forecast. “The oil market is still rebalancing from last year’s demand surge,” the IEA judged.

It said that demand pressures in China and the United States had continued to ease, and that it had revised downwards its estimate of demand in Europe, but consumption in some other regions had risen.—AFP