Oil drops below $62 ahead of US stocks data

17 February 2015 (Last Updated February 17th, 2015 18:30)

The price of Brent crude oil fell below $62 a barrel on Wednesday after gaining more than 1% in the earlier session.

The price of Brent crude oil fell below $62 a barrel on Wednesday after gaining more than 1% in the earlier session.

Reuters reported that Benchmark Brent crude futures were down 83 cents at $61.70 and US crude declined 60 cents $52.93 a barrel.

Analysts said that the drop was in response to increasing prices of the last two weeks, which they say was overblown.

"US refinery outages, through seasonal maintenance and industrial action, will weaken US crude demand, exacerbating the crude stock excess in the near term."

Oil prices have increased by more than 35% since reaching a six-year low of $45.19 earlier in 2015 due to reduced industry investments and declining rig counts in the US.

BNP Paribas analysts were quoted by the news agency as saying the recent surge in prices was premature given record-high US crude stocks.

Oil strategists Gareth Lewis-Davies and Harry Tchilinguirian said in a note to traders: "US refinery outages, through seasonal maintenance and industrial action, will weaken US crude demand, exacerbating the crude stock excess in the near term."

A preliminary survey by Reuters has revealed that US commercial crude oil stockpiles are already at their highest since records began and are estimated to have increased again last week by 3.1 million barrels.

The American Petroleum Institute is due to unveil US stocks data later today.