Oil prices pointing toward correction territory

Feb. 14 (UPI) -- Supply-side pressures and broader signs that markets may have overheated earlier this year helped send crude oil prices lower in early Wednesday trading.

Crude oil prices have moved considerably lower for most of February, offsetting a steady run higher for most of January. After settling above $70 per barrel last month, Brent crude oil prices have now given up all their gains and are hitting lows not seen since November.

Enthusiasm about the general health of the global economy, geopolitical risk factors and optimism over an extended agreement from the Organization of Petroleum Exporting Countries to balance a lopsided market overshadowed strong gains in U.S. oil production since late last year.

In its weekly snapshot, the American Petroleum Institute reported late Tuesday that U.S. crude oil inventories swelled by 3.9 million barrels. A survey of analysts from commodity pricing group S&P Global Platts earlier this week revealed expectations of a 3 million barrel increase in U.S. crude oil stockpiles.

Official data from the U.S. Energy Information Administration is due out about an hour after the market opens and will influence the direction for crude oil prices for the rest of the day and into the Thursday session.

Nevertheless, Ole Hanson, the head of commodity strategy at Saxo Bank, told UPI the price for oil is "most certainly" in correction mode. By his read, a U.S. economic policy that bets growth will offset pending deficits is like playing Russian roulette with the world's largest economy.

"All in all, it's enough to trigger a long overdue reduction in bullish bets," he said. "Whether it stops here, or $5 lower, all depends on how strong the need to cut bullish bets will be."

The price for Brent crude oil was down 0.89 percent as of 9:15 a.m. EST to $62.16 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 1.2 percent to $58.48 per barrel

Gasoline inventories in the United States increased as well, signaling demand may be on the decline. On Wednesday, the U.S. Bureau of Labor Statistics released its highly-anticipated consumer-price index, a gauge on the inflation in what people pay for everything from clothes to food. Data show the CPI increased on all consumer items from 0.2 percent in December to 0.5 percent last month.

Consumer gasoline prices on average went from contraction in December of 0.8 percent to an increase of 5.7 percent in January. Year-over-year, all prices increased on average by 2.1 percent.

Recent concerns about surging inflation led to historic losses on major world stock indices. Analysis emailed from UBS on Wednesday said the dip in equities markets is spilling over into commodities.

"Oil prices have fallen to a four-week low, and we believe there is room for more price weakness in the near term," the report read. "The positive sentiment in the oil market, thanks to high OPEC compliance, strong demand growth and lower inventories, is changing, in our view."