Oil Prices Surrender Gains on U.S. Demand Concerns

NEW YORK ( TheStreet) -- Oil prices were surrendering the previous day's solid gains in response to a crude inventory report that pointed to a slowdown in U.S. demand and eurozone troubles.

West Texas Intermediate (WTI) light sweet crude oil for February delivery was losing 69 cents to $101.55 a barrel, while Brent crude for March delivery was falling 29 cents to $112.67 a barrel.

The America Petroleum Institute reported late Tuesday that U.S. gasoline and distillate stocks rose about a respective 1.9 million barrels and 850,000 barrels last week, possibly signaling a slowdown in demand in the world's largest economy.

What's more, crude oil inventories increased by almost 400,000 barrels week-over-week.

Analysts surveyed by Platts had been expecting a 1 million barrel decline in crude stocks.

The Department of Energy will be reporting last week's crude inventory levels at 10:30 ET today.

A stronger dollar was also exerting pressure on prices today. The U.S. dollar index was rising 0.5% to $81.29.

The euro was slipping against the dollar as eurozone worries began rattling the markets once again.

Investors, after cheering the previous day's decent start to U.S. earnings season, were now turning to Fitch Ratings' warning that there is a big chance it will downgrade Italy's credit rating by the end of the month following a review of six eurozone nations under its credit watch negative list.

Furthermore, Fitch managing director David Riley warned at a press conference Tuesday that an exit by Greece from the eurozone this year is a possibility, adding to uncertainties about the future of the single-currency bloc.

"European concerns are creeping back into the marketplace," PFGBest senior energy analyst Phil Flynn summed up.

Energy stocks were sliding in premarket trading Wednesday. BP ( BP) was falling 1.8% to $43.60; Exxon ( XOM) was down 0.4% to $85.41; Marathon Petroleum ( MPC) was losing 4.5% to $30.41; Triangle Petroleum ( TPLM) was down 0.7% to $7.15; ConocoPhillips ( COP) was down 0.3% to $73.09; Royal Dutch Shell ( RDS.A) was giving up 3.2% to $71.95; and Statoil ( STO) was behind by 1.6% to $25.41.

-- Written by Andrea Tse in New York.

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