By Santosh Menon
U.S. crude for March delivery
Oil prices fell on Wednesday after a government report showed a surprisingly big build in U.S. petroleum stockpiles, pointing to weaker demand ahead.
Refinery production rates slipped another 0.7 percentage points to stand a full 3 percentage points below a year ago, with weak underlying demand dampening profits, analysts said.
"Instead, it seems that problems are getting worse...We would not be surprised to see a much sharper break in crude oil prices over the next few weeks," said Edward Meir at MF Global.
Oil prices have tumbled from their January record above $100 on mounting concerns of the U.S. recession, and traders said the market appeared to disregard bullish news such as recent production shutdown in the North Sea and Nigeria.
"At the end of last year, if you had news like this, it (oil) would be hitting new highs. Now every time there is a rally, it seems to get sold into. I think funds are continuing to liquidate their positions," said Christopher Bellew at Bache Commodities.
The National Weather Service eight to 14-day outlook released on Wednesday called for normal or below-normal temperatures for the northern half of the United States, with above seasonal readings expected for the rest of the country.
The poll of 20 analysts forecast average world oil demand growth this year at 1.43 million bpd, down from 1.56 million bpd in a similar poll last August and well short of International Energy Agency's forecast of 1.98 million bpd.