NEW YORK (CNN/Money) -
Oil prices bounced back from early losses Wednesday, after dipping below $53 a barrel, as the Energy Information Administration reported an unexpectedly large increase in crude inventories last week to the highest level in nearly three years.
Light crude for May delivery fell 24 cents to $53.99 a barrel, nearly $4 below an all-time peak of $57.60 set March 17. Earlier in the day, oil traded down more than $1.00 a barrel, but pared losses late as heating oil rallied.
London Brent lost 94 cents to $52.09 a barrel.
Rising fuel stocks in the U.S., the world's biggest energy consumer, have helped push prices down from last month's peak.
According to the EIA report, crude oil inventories rose 5.4 million barrels, well above the 2.2-million-barrel increase analysts expected.
Distillate fuel fell by 1.1 million barrels, slightly less than the 1.5-million-barrel decline analysts expected.
Gas reserves fell by 2.9 million barrels. Analysts had predicted a 1.8-million-barrel decline.
"Crude supply is no longer an issue. We have plenty of it. However, that crude number is being countered to some extent by the large decline in gasoline stocks," Jim Ritterbusch of Ritterbusch and Associates in Illinois told Reuters.
The OPEC producer cartel lifted its formal output ceiling by 500,000 bpd to 27.5 million bpd in mid March in an effort to pump up second-quarter global stocks, creating a cushion for anticipated robust fourth-quarter demand.
The Organization of Petroleum Exporting Countries President Sheikh Ahmad al-Fahd al-Sabah said Tuesday the group does not need to increase oil production now but will need to raise supply by more than a million bpd for the third quarter.
"But if there is supply disruption, there is not a lot of wiggle room as far as what OPEC and non-OPEC producing countries can do to boost production if needed. Spare capacity is really the key question," said John Brady, an energy broker at ABN Amro in New York.
Output from OPEC is close to a 25-year high and non-OPEC producers are pumping at full tilt, leaving little in the supply chain for any output hitch.
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