Oil Dropped On US Inventory Surplus

Oil prices fell 1.6 per cent on Thursday on US inventory surplus heading into spring and weakness in the natural gas market.

US light crude futures eased 79 cents to $47.54 a barrel on the New York Mercantile Exchange. In London Brent crude futures fell 33 cents at $45.82 on the International Petroleum Exchange.

The losses cut into Wednesday's dollar-plus gains made on worries a fresh OPEC cut could drain hefty stockpiles and make it hard for refiners to produce enough fuel.

OPEC, which controls about 40 per cent of global oil exports, has been contemplating a cut to its output limits to defend prices in the second-quarter, when demand typically slows. The cartel meets in mid-March.

A US government report released on Wednesday showed crude stocks in the world's largest energy consumer 8.5 per cent higher than last year and petrol supplies 7.4 per cent higher, at the highest level since 1999.

Hefty inventory levels, the result of strong imports and domestic refinery output, have helped to ease concerns of a springtime crunch when nicer weather and vacation season draws more motorists to the roads.

US petrol futures slumped 4.63 cents to $1.2365 a gallon on the NYMEX.