Oil is falling due to the increase in US crude stocks

Oil prices fell on Wednesday, retreating from their highest levels in three months the day before, after industry data showed a rise in US crude stocks, but signs of shrinking global supplies and hopes for a stimulus in China limited losses.

Brent crude futures fell 32 cents, or 0.4 percent, to $83.32 a barrel by 0036 GMT. The price of US West Texas Intermediate crude was $79.35 a barrel, down 28 cents, or 0.4 percent.

“The increase in US crude inventories last week caused some selling,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, adding that investors also arranged their positions ahead of the Federal Reserve’s monetary policy decision.

US crude inventories rose by about 1.32 million barrels in the week ending July 21, according to market sources, citing figures from the American Petroleum Institute on Tuesday. Analysts polled by Reuters had expected a decline of 2.3 million barrels.

Gasoline stocks decreased by 1.04 million barrels, while distillate stocks increased by 1.61 million barrels.

US government data on inventories is due on Wednesday.

Prices fell after Brent and West Texas Intermediate crude reached their highest levels since April 19 on Tuesday, amid fears of shrinking supplies and pledges by the Chinese authorities to support the world’s second largest economy.

And oil prices achieved four consecutive weekly gains, with expectations of shrinking crude supplies due to the Organization of the Petroleum Exporting Countries (OPEC) and its allies cutting production.

The latest government data released yesterday showed that Saudi oil exports fell by about 40 percent in May compared to the same period a year ago.

Meanwhile, leaders in China, the world’s second largest oil consumer, pledged to boost economic policy support.