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LONDON: Oil prices fell on Wednesday after a sharp spike the previous day as the market reacted to a much larger-than-expected increase in US crude reserves, traders said.
New York's main contract, light sweet crude for September delivery, dropped 1.22 dollars to 113.31 dollars a barrel. London's Brent North Sea crude for October shed 95 cents to 112.30 dollars.
The US government's Department of Energy said on Wednesday that US crude oil stockpiles climbed 9.4 million barrels in the week ending August 15 – analysts had forecast a much smaller gain of 800,000 barrels.
The DoE said US gasoline or petrol reserves fell 6.2 million barrels last week, compared with market expectations for a drop of 2.4 million barrels.
Gasoline stocks are closely watched at this time of year as American motorists are on the highways for their summer vacations, typically pushing up demand for gasoline.
Oil prices had closed up by more than one dollar on Tuesday after OPEC member Venezuela said it would ask the cartel at its September meeting to cut production if downward price pressure continues.
Oil prices are down from record highs above 147 dollars set in July as weak economic growth is denting global demand for energy.
Oil fell close to 110 dollars in early trade on Tuesday as Tropical Storm Fay missed energy production facilities in the Gulf of Mexico.
However oil prices, which broke through the 100-dollar level at the start of 2008, remain well above year-ago levels.
The Organization of Petroleum Exporting Countries (OPEC), which is steered by Saudi Arabia, produces about 40 percent of the world's crude.
A leading British energy consultancy, CGES, had on Monday said that OPEC might decide to cut output next month should the price of crude fall under 100 dollars.
Oil prices had begun the week by falling, pressured by news that the Baku-Tbilisi-Ceyhan (BTC) pipeline would soon reopen.
British energy giant BP said Wednesday that tests were underway on the BTC pipeline after repairs were completed on the fire-damaged conduit.
"We began the dynamic testing of the pipeline Wednesday. This is a test that needs to be done before full operation," company spokesman Murat Lecompte told AFP.
He could not say when full operation would resume exactly but added that they expected to start loading oil onto ships at the port of Ceyhan on Turkey's Mediterranean coast "early next week".
- AFP/so
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