LONDON, Jan 24: World oil prices headed lower on Wednesday, handing back some of the previous day’s sharp gains after news that US energy stocks rose across the board last week, traders said.

New York’s main oil futures contract, light sweet crude for delivery in March, lost 84 cents to $54.20 per barrel in floor trading.

In London, the price of Brent North Sea crude for March delivery shed 61 cents to $54.49 per barrel in electronic deals.

The US Department of Energy (DoE) revealed on Wednesday in a market update that levels of distillate products, such as heating oil and diesel fuel, increased 700,000 barrels to 142.6 million in the week ended January 19.

That confounded analysts’ consensus forecasts for a decline of 250,000 barrels.

Demand for heating oil across the US northeast was expected to increase this week as temperatures have fallen in recent days amid snow storms in some areas.

The DoE added that crude oil reserves rose 700,000 barrels to 322.2 million barrels last week.

The rise was notably less than expected as most oil traders had expected crude inventories to swell by 1.3 million barrels.

And gasoline or petrol reserves surged 4.0 million barrels to 220.8 million, against expectations of a rise of just 1.5 million barrels.

Prior to the report, crude futures had also traded in negative territory on profit-taking after Tuesday’s bumper gains that were sparked partly by colder US temperatures, dealers said.

“Crude oil futures surged higher on Tuesday on news that the US plans to build up its emergency crude reserves amid a background of colder weather in the US,” said Michael Davies, an analyst with the Sucden brokerage in London.

On Tuesday, prices had soared almost eight per cent in New York to hit $55.15. London Brent crude meanwhile jumped nearly five per cent to reach $55.18 per barrel.—AFP