Oil declines to 1-month low amid ample US crude stockpiles

Oil fell to the lowest level since April amid speculation that the drop in US crude inventories will taper off.

US crude stockpiles rose 1.3 million barrels last week, the industry-funded American Petroleum Institute was said to have reported Wednesday. Government data is projected to show supplies fell by two million barrels, according to a Bloomberg survey. The dollar strengthened to a 12-year high against the yen, reducing the appeal of commodities as a store of value.

Oil's recovery from a six-year low faltered this month amid speculation that a supply glut will persist. Crude stockpiles in the US remain near the highest level since 1930 and 100 million barrels above the five-year average for this time of the year. Investors are pulling money out of energy producers for the first time in eight months, taking short-term gains after oil rebounded.

"It will be interesting to see if today's data will show a crude supply gain like the API yesterday," Bob Yawger, director of the futures division at Mizuho Securities USA Inc in New York, said by phone. "If it does that would obviously be bearish for the market."

West Texas Intermediate for July delivery fell 63 cents, or 1.1 per cent, to $56.88 a barrel at 9:45 a.m. on the New York Mercantile Exchange.