Oil prices fall after big jump in U.S. stockpiles

Oil prices fall after big jump in U.S. stockpiles
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TOKYO (March 24): Oil prices dropped in early Asian trading on Thursday, adding to a slump in the previous session after U.S. stockpiles rose for a sixth week to another record, sapping the strength of a two-month rally in prices.

U.S. crude futures were down 23 cents at $39.56 a barrel at 0047 GMT, trading further below the important $40 level.

They closed down $1.66, or 4 percent, at $39.79 a barrel on Wednesday. That marked the sharpest one-day drop for the front-month contract in U.S. crude since Feb. 11.

Brent crude futures were down 17 cents at $40.30 a barrel. They finished the last session down $1.32, or 3.2 percent, at $40.47 a barrel.

Both benchmarks had by earlier this week risen by more than 50 percent from multi-year lows hit in January.

The U.S. government's Energy Information Administration (EIA) said crude stockpiles climbed by 9.4 million barrels last week - three times the 3.1 million barrels build forecast by analysts in a Reuters poll.

The continued rise in stockpiles is grinding away at the gains in prices that were largely driven by plans by major producers including Saudi Arabia and Russia to freeze production.

The market was also supported by a release showing crude stockpiles at the Cushing, Oklahoma, delivery hub - an important data point - fell for the first time in seven weeks.

Things could get worse for oil bulls, with trading houses betting on oil markets being over supplied for at least two more years and looking to extend or lock in new leases on storage tanks.