04/03/2013 09:51 EDT | Updated 06/03/2013 05:12 EDT

Oil price falls to below US$97 a barrel amid expectations of growing US supplies

The price of oil fell below US$97 a barrel Wednesday ahead of the release of a report that's expected to confirm crude supplies are still burgeoning.

By early afternoon in Europe, benchmark West Texas Intermediate crude for May delivery was down 49 cents to US$96.70 a barrel in electronic trading on the New York Mercantile Exchange. The contract had gained 12 cents to finish at US$97.19 on Monday, buoyed by strong reports on U.S. auto sales and factory orders.

The market is watching for the latest reports on supplies of oil and petroleum products.

While analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast a build of 2.5 million barrels in oil supplies last week, the American Petroleum Institute said Tuesday that crude stocks rose by 4.7 million barrels in the week ended March 29.

The report from the Energy Department's Energy Information Administration — the market benchmark — will be out on later Wednesday.

Supplies are already more than nine per cent above year-ago levels, a figure that goes against what would be expected when the economic data out of the U.S. is looking so rosy.

"Equity and commodity markets have drifted significantly apart of late," said a report from Commerzbank in Frankfurt. "In addition to the cheap liquidity that is prompting investors to buy equities, they are clearly also reshuffling their commodities investments, which would explain the opposing trends."

Brent crude, used to price many kinds of oil imported by U.S. refineries, was down 65 cents to US$110.04 per barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex, wholesale gasoline fell 2.79 cents to US$3.0129 a U.S. gallon, heating oil lost 1.03 cent to US$3.0771 a gallon and natural gas retreated 0.2 of a cent to US$3.967 per 1,000 cubic feet.