Crude futures lost some ground Wednesday due to caution ahead of weekly U.S. oil stock data by the Department of Energy. Bearish sentiment heightened further after the American Petroleum Institute reported a sharp increase of 4.6 million barrels in crude oil inventories Tuesday. 'Considering the rebound of the dollar, if the DOE are to confirm the overall stockbuild suggested by the API, then we would expect WTI to take a breather to a consolidation around the $50/bbl mark,' said Olivier Jakob, managing director of Swiss Consultancy Petromatrix. The DOE data, due 1430 GMT, are likely to show crude oil inventories in the U.S. rose 1.3 million barrels in the week ended March 20, according to a Dow Jones" survey of 16 analysts. Gasoline inventories are seen falling 500,000 barrels, while stocks of distillates, which include heating oil and diesel fuel, are expected to rise 200,000 barrels, the survey showed. At 1130 GMT, the front-month May Brent contract on London"s ICE futures exchange was down $1.11 at $52.39 a barrel. The front-month May light, sweet, crude contract on the New York Mercantile Exchange was trading $1.22 lower at $52.76 a barrel. The ICE"s gasoil contract for April delivery was down $1.25 at $467.00 a metric ton, while Nymex gasoline for April delivery was down 252 points at 147.74 cents a gallon. Despite gains over past few weeks, crude futures are flipping to a deeper contango. 'This is a sign of weakness,' as in a real bull market the front of the curve typically flattens and eventually moves to backwardation, said energy analyst Stephen Schork. This suggests some force other than near-term fundamentals are driving the current 'strength' in crude futures, he said. Simon Wardell, an analyst at Global Insight in London, said current fundamentals don"t justify the recent gains in crude prices. The recent rally 'came a bit prematurely in my view. 'Demand is still exceptionally weak. We still see inventory build in the U.S. We still have floating storage to get rid of,' Wardell said. The output cuts by the Organization Of Petroleum Exporting Countries may help tighten the market, 'but this is going to take some time, and we are probably not there yet...I won"t be surprised to see that prices come off quite a bit in the near term,' he said. China Tuesday raised benchmark retail prices of gasoline and diesel by 3%-5%, an increase seen as rather modest compared with a rise of more than 40% in crude oil since China last cut its fuel prices Jan. 14. But 'one should not interpret this price increase as a reflection of significantly improved demand in China,' said Paul Ting, president of consultancy Paul Ting Energy Vision LLC. China"s oil demand 'may have bottomed in January with a 10.9% of demand decline, but February demand showed only signs of modest recovery but still a decline versus last year,' Ting said.

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