Brent crude falls

Brent crude futures fell on Wednesday as an unexpected rise in US oil inventories stemmed an early rally ignited by the top central banks' joint invention to avoid a global liquidity crunch. By 2:50 pm EST (1950) ICE January Brent crude traded in London was down 44 cents at $110.38 a barrel. In early trade it rose to a two-week high $112.03.
Despite the loss, Brent was on a course to end the month with a slim gain. Brent crude was also under pressure as Libyan oil production has reached more than half its pre-civil war level, adding to potential supplies that will find their way to Europe, analysts said. US crude for January pared gains and settled up 57 cents, or 57 percent, at $100.36, having earlier hit $101.75, the highest since November 17.
For the month, US crude gained $7.17, or 7.7 percent, extending gains to two straight months. Brent's premium against US crude narrowed to around $10.15, from $11.02 on Tuesday. Brent's trading volume was up 14 percent from its 30-day average. US crude's volume was down 16 percent from the 30-day average. US government data showed that domestic crude oil stockpiles jumped 3.9 million barrels last week, going against the forecast for a 200,000 barrel drawdown.
A sharper than expected 5.5 million increase in distillate stocks, which include heating oil and diesel fuel, also pressured crude futures. "Today's EIA data was predominately bearish across the board, with crude and distillate stocks building much more than expected," said Chris Jarvis, president of Caprock Risk Management in Rye, New Hampshire.
Earlier, the US Federal Reserve, the European Central Bank and the central banks of Canada, Britain, Japan and Switzerland said they had agreed to cut the cost of existing dollar swaplines by 50 basis points from December 5 to ensure that banks outside the United States have easy access to dollar. Oil futures were also supported in early trade by a move by China's central bank to cut the reserve requirement ratio for its banks by 50 basis points. The action, the first taken in nearly three years was seen stimulating more lending.
US economic data showed that the pace of job growth in the private sector accelerated in November, with US employers adding 206,000 jobs, for a gain of 130,000. Geopolitical tensions remained in focus as Britain shut down the Iranian embassy in London and expelled its staff after Iranian protesters stormed British embassy compounds in Tehran on Tuesday. Britain also closed its embassy in Tehran.