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* U.S. crude oil inventories rise exceeds forecast - EIA
* U.S. distillate stocks fall more than expected
By Dasha Afanasieva
LONDON, March 6 Crude oil fell more than $1 per
barrel on Wednesday after U.S. government data showed domestic
crude inventories rose much more than forecast.
U.S. crude oil stocks increased by 3.83 million barrels in
the week to March 1, the Energy Information Administration said
in its weekly report. Analysts had forecast a 500,000-barrel
U.S. distillate stocks fell more than expected as refinery
utilisation rates posted a surprise drop, according to EIA data
"This is all definitely putting some pressure on (crude oil)
in the short term," said Phil Flynn, analyst at The Price
Futures Group in Chicago. "The refinery runs right now are down
and the build in inventories is rising."
"The crude market hasn't bottomed yet. There's still
pressure on the downside. If you're looking for the bottom, some
patience is needed, look for some more volatility still."
Brent crude oil futures fell $1.15 to a low of
$110.46 per barrel before recovering to trade around $110.60 by
1620 GMT, off an earlier high of $112.23. U.S. light crude oil
lost $1.00 to $89.82.
"A mildly bearish weekly U.S. fuel inventory report (has)
added some pressure to crude prices following a
larger-than-expected crude build," said Andrey Kryuchenkov,
analyst at VTB Capital.
"Some refineries came out of maintenance in the week before.
Due to decent product demand and favorable cracks now we are
back at low runs with the seasonal trend restored," he added.
The U.S. inventory data offset bullish macro-economic
statistics, including data from a payroll processor which showed
private sector employment increased more than expected.
Increased signs of a strengthening U.S. economy and
continued support from the Federal Reserve pushed European stock
indices to their highest level since the 2008 financial crisis
Private employers added more jobs than expected in February,
according to a report from a payrolls processor, boosting hopes
that the beleaguered labour market was healing.
The oil market also watched developments in Venezuela,
following the death of President Hugo Chavez after a two-year
battle with cancer.
Investors were on the lookout for a succession plan in the
OPEC nation. The country's oil industry was operating normally
and no disruption was expected, state oil company PDVSA said.
"His death is not likely to have any major impact on the oil
market," Tetsu Emori of Astmax Investments said. "But investors
are waiting and watching."
(Reporting By Dasha Afanasieva, editing by Christopher Johnson)