Oil prices declined on Wednesday, after an increase in US crude stocks quashed optimism over supply.

Brent crude LCOc1 edged down 55¢ to $31.25 a barrel, while the US crude futures CLc1 slipped 94¢ to $30.51 a barrel, Reuters reported.

Another contraction in Chinese industrial profits, along with caution prior to the outcome of the US Federal Reserve’s first policy meeting this year, cut $1 off the prices.

"Low prices for oil and commodities are likely to be with us for some time."

The American Petroleum Institute said that US inventories increased by 11.4 million barrels for the week ended 22 January to 496.6 million. This is against analyst expectations for an increase of 3.3 million barrels.

SEB analyst Bjarne Schieldrop told the news agency: "It’s a terrible situation in the physical market and stocks are just going to pile up more, so we will get these reels down again."

In addition, three US shale oil companies have reduced their capital spending plans for this year to survive the oil price, which is $30 a barrel.

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OPEC Secretariat calculations revealed that the price of OPEC basket of 13 crudes stood at $25.11 a barrel on Tuesday, compared with $25.58 the previous day.

According to projections by World Bank, oil prices would fall to $37 a barrel compared with $51 a barrel in its October projections.

The report added that prices dropped by 47% last year and are expected to decline, on an annual average, by another 27% this year.

Its Commodity Markets Outlook report said that sooner-than-anticipated resumption of exports by Iran, greater resilience in US production due to cost cuts and efficiency gains, a mild winter in the Northern Hemisphere, and weak growth prospects in major emerging market economies will impact oil prices.

Commodities Markets Outlook senior economist and lead author John Baffes said: "Low prices for oil and commodities are likely to be with us for some time.

"While we see some prospect for commodity prices to rise slightly over the next two years, significant downside risks remain."