NEW YORK (Reuters) - Oil fell on Wednesday in choppy trading after weekly data showed another build in U.S. crude inventories, just as the market began to recover from an initial Brexit-like reaction to Donald Trump's surprise victory in the U.S. presidential election.
The Energy Information Administration said U.S. crude stockpiles rose 2.5 million barrels last week, a million more than analysts had forecast. [EIA/S]
The build was not as big a shock as the previous week's record 14 million-barrel build but data also showed rising domestic production.
"The dramatic increase of 170,000 barrels per day in crude production is clearly bearish and should cause concern among the OPEC members trying to determine cuts and quotas," said James L. Williams, energy economist at WTRG Economics in London, Arkansas.
Brent crude was down 13 cents at $45.91 a barrel by 11:23 a.m. ET (1623 GMT), after slipping to a three-month low earlier. U.S. crude was down 9 cents to $44.89.
Crude had tumbled as much as 4 percent with U.S. crude slipping to near $43 - a near two-month low - early in the session in the immediate aftermath of the U.S. presidential election results.
The selloff was part of a broad-based market reaction where investors fled risky assets such as stocks and the dollar, which have since turned positive.
With Trump's win, the Organization of the Petroleum Exporting Countries (OPEC) face the prospect of increased U.S. oil output - a major bugbear for the 14-country oil-producing cartel - given his pledge to open all federal land and waters for fossil fuel exploration.
Oil analysts also say while Trump's victory raised concerns about future economic growth and oil demand, there were supportive factors for prices such as a potential shift in U.S. policy towards Iran.
"It remains to be seen whether U.S. President Trump will revoke the nuclear agreement with Iran that he has criticised so strongly," Commerzbank said in a note.
"If so, oil prices would presumably rise."
Trump has criticised the West's nuclear deal with Iran, an accord that has allowed Tehran to increase crude exports sharply this year. Iran said Trump should stay committed to the deal.
Despite a recovery from 12-year lows hit early this year, oil prices are still less than half of their level of mid-2014, pressured by excess supplies. Other analysts cited bearish impacts from the election result.
Daniel Yergin, vice-chairman of analysis firm IHS Markit and author of The Prize, a well known history of the oil industry, said it could compound supply-side headwinds with demand concerns.
"The outcome of the U.S. election adds to the challenges for the oil exporters because it likely leads to weaker economic growth in an already fragile global economy," he said. "And that means additional pressure on oil demand."
In an attempt to boost prices, the OPEC agreed in September to cut output, although investor doubts have grown that it will be able to implement the deal at its next meeting on Nov. 30.
(Additional reporting by Scott DiSavino and Ethan Lou in New York, Alex Lawler in London, Henning Gloystein and Maha El Dahan; Editing by Marguerita Choy and Jason Neely)