Oil Falls on U.S. Inventory Increases

Crude prices fell on Wednesday as U.S. crude inventories increased last week.

The Energy Information Administration reported U.S. crude stocks added 1.3 million barrels in the week ending Jan. 4 as demand for oil continued to be weak in the week, slightly lower than the market's expectation of a rise of 1.5 million barrels. Meanwhile, the inventories of gasoline and distillates rose sharply by 7.4 million barrels and 6.8 million barrels, respectively.

The report also showed U.S. crude production rose more than 7 million barrels per day last week, the first time since 1993. The EIA said in another report released Tuesday that U.S. crude oil production would register the biggest increase on record this year, and is expected to soar 25 percent over two years.

The extremely heavy U.S. domestic oil supplies pressured on the oil prices.

Besides, crude markets got choppy as investors were awaiting the trade data from China and the results of the European Central Bank's monthly policy meeting.

As the world's second largest oil consumer, China has been always the focus of crude investors. The latest trade data due to be released Thursday would offer more signs about its economic health.

The ECB would decide whether to cut interest rates on Thursday, which would be crucial for the struggling economy in the euro zone. Also, investors were watching on the moves of the Bank of England that started its two-day policy meeting Wednesday.

The oil markets were also affected by performances of big companies as the corporate earnings report season started on Wall Street late Monday.

Light, sweet crude for February delivery lost 5 cents, or 0.05 percent, to settle at 93.10 dollars a barrel on the New York Mercantile Exchange. Brent crude for February delivery dropped slightly by 18 cents, or 0.16 percent, to finish at 111.76 dollars a barrel.