U.S. Crude Oil Inventories Rise to Highest Level Since 1990

crude oil inventories highest level 1990
Damian Dovarganes/AP
By Robert Gibbons

NEW YORK -- Oil prices fell more than 2 percent on Wednesday as U.S. crude oil inventories grew to their highest level since 1990 and weak economic data stoked worries about U.S. energy demand.

U.S. crude stocks rose 2.71 million barrels last week, the Energy Information Administration said in its weekly report.

The rise was slightly more than the build of 2.2 million barrels expected in a Reuters survey of analysts and put U.S. commercial inventories at 388.62 million barrels, the most since 1990 and close to the record 391.9 million barrels reached in 1982, the year the EIA started tracking inventories.

"The report is somewhat bearish given the build in crude oil inventories and modest decline in gasoline inventories, which are the focus of the market," said John Kilduff, partner at Again Capital LLC in New York.

"The rise in the refinery utilization to above 86 percent also signals further easing of the concerns over refined product inventories," Kilduff said.

U.S. RBOB gasoline futures fell 3 percent, more than 9 cents, after or dropping 6 cents on Tuesday, as the EIA said gasoline stocks fell 572,000 barrels, less than expected and much less than the drop of 5 million barrels reported late on Tuesday by the American Petroleum Institute.

Brent crude was down $2.72 at $107.97 a barrel at 12:52 p.m. EDT, having fallen as low as $107.78.

U.S. crude was down $2.19 at $95 a barrel, having fallen to $94.89, just above the 50-day moving average at $94.64. Brent's premium to U.S. crude fell back below $13 a barrel on Wednesday, after it reached $14.66 on Tuesday.

The spread between the two contracts had been widened because of expectations that crude stocks at the Cushing, Okla., hub, delivery point for the U.S. crude contract, would be increasing after Exxon Mobil Corp. (XOM) shut its Pegasus pipeline on Friday.

The pipeline moves crude oil from Illinois to the refinery-rich Texas Gulf Coast and a prolonged shut down would curb efforts to relieve the glut of crude oil in the Midwest.

Economic Concerns

Crude stocks at Cushing fell 287,000 barrels in the week to last Friday, the EIA report said.

With the North American heating fuel season waning and crude futures sliding, U.S. heating oil futures, the benchmark distillate contract, also fell and pushed below the 50-day and 100-day moving averages, technical levels monitored by chart watching analysts and traders.

Total distillate stocks fell 2.27 million barrels last week, the EIA said, more than expected, but the inventory drop and data showing demand over the previous four weeks was up 5.5 percent from the year-ago period didn't prevent heating oil's price slide.

U.S. companies hired at the weakest pace in five months in March, while growth in the nation's services sector slowed as the first quarter ended, data showed on Wednesday, adding to concerns about demand in the world's No. 1 oil consumer.

The report on private sector hiring arrived ahead of Friday's closely watched U.S. March nonfarm payrolls report, which investors will sift through for signs of whether the economy has been slowed by headwinds from a tighter fiscal policy, the sequestration or automatic government spending cuts.

U.S. nonfarm payrolls are expected to be up 200,000, according to a Reuters survey of economists.

The weak U.S. data adds to concerns about demand for oil already in play because of Europe's wobbly economy, with reports this week showing unemployment up in the eurozone and manufacturing gauges indicating contraction.

Europe's demand for oil has also been hit by seasonal refinery maintenance, traders said.

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Additional reporting by Peg Mackey in London and Luke Pachymuthu in Singapore; editing by David Gregorio.


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darbrow717

Why is this article still up, running out of lies?

May 16 2013 at 2:37 PM Report abuse rate up rate down Reply