NYMEX crude falls sharply in Asia as API data shows 12.2 mln/b build

Investing.com - Crude futures dropped sharply in early Asia on Wednesday water industry data showed a solid build in U.S. crude stocks.

Industry data from the American Petroleum Institute showed a 12.2 million build in crude stocks last week, while distillates rose by 331,000 barrels and gasoline by 2.7 million barrels.

The data comes ahead of more closely-watched figures from the Department of Energy.

On the New York Mercantile Exchange, WTI crude oil for May delivery slumped 2.05% to 52.886 a barrel.

Overnight, WTI crude oil futures rose by nearly 3.5% on Tuesday, amid a stronger dollar and dwindling supply as prices reached a seven-week high.

On the Intercontinental Exchange (ICE), brent crude for May delivery gained 0.94 or 1.62% to 59.06 a barrel on Tuesday.

On Monday, Genscape, Inc., a global provider of energy information for financial and commodity markets, said that supply levels at the Cushing Oil Hub in Oklahoma rose by only 169,000 for the week ending April 3. By comparison, inventories at Cushing grew 2.629 million barrels for the week ending Mar. 27, one week after an increase of 1.911 million. Last month, the Energy Information Administration (EIA) reported that supply levels in the U.S. for crude storage had reached 62% of capacity.

Since last June prices for crude futures have plunged roughly 50% after moving above $100 a barrel during the summer months. Analysts believe that prices could plummet even further if U.S. crude storage reaches capacity, a development that would force producers to slow output. In March, the EIA revised its estimate for 2015 U.S. crude production to 9.3 million barrels per day, its fastest rate in 30 years.

A bearish outlook on short-term crude prices from Goldman Sachs (NYSE:NYSE:GS), however, softened Tuesday's gains. In a note to investors, the bank indicated that it is unlikely that crude futures could reach $65 a barrel in 2016 if production levels remain constant.

"Prices need to remain low in coming months to achieve a sufficient and sustainable slowdown in U.S. production growth," Goldman said in the note.

Meanwhile, international prices also rallied as delegates from Iran met with Chinese leaders in Beijing. China, Iran's largest oil client, has purchased roughly half of Iran's oil exports since 2012. Iran currently has approximately 30 million barrels of oil in offshore reserves ready for export, according to the EIA.

Iranian oil exports are expected to surge after Western powers temporarily suspended economic and financial sanctions last week. If Iran increases oil exports substantially over the next year, the EIA said annual average growth could increase by 500,000 barrels per day in production in 2016.