Oil Futures at Lowest in Week After US Inventories Hit 3-Decade High
Oil futures fell to their lowest level in a week Wednesday after a report showed U.S. oil inventories rose to their highest level in more than three decades last week.
Crude-oil stockpiles surged 6.7 million barrels to 395.3 million barrels during the week ended April 26, the Energy Information Administration reported Wednesday. The rise sent U.S. oil inventories to their highest level since the agency began reporting weekly oil stocks in 1982.
"There's no way you can spin that--that's a lot of crude," said Bob Yawger, director of energy futures at Mizuho in New York. "The big issue is overall storage."
Light, sweet crude for June delivery settled $2.43, or 2.6%, lower at $91.03 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled down $2.42, or 2.4%, to $99.95 a barrel.
The week's steep increase in stockpiles was due largely to an increase in U.S. oil imports to the Gulf Coast. Some analysts attributed the jump to the restart of several Gulf-area refineries following a power outage. The rate of oil imports to the U.S. still remains low, with last week's figure down 7.4% from a year earlier.
Weak oil and fuel demand have contributed to higher inventories in recent months. The EIA said its measure of gasoline demand fell 3.8% last week to 8.4 million barrels a day, as high unemployment continues to keep motorists off the road.
U.S. oil futures are down 8.1% from their recent peak in February, a development that many analysts say is translating to lower gasoline prices. The average price for U.S. retail gasoline was $3.522 a gallon, down from $3.634 a month ago, according to auto club AAA.
Crude-oil prices were also dented by a barrage of negative economic data Wednesday. A report from payroll processor Automatic Data Processing Inc. showed U.S. private businesses added just 119,000 jobs last month, fewer than expected.
Traders also contended with a weaker-than-expected reading on the Chinese manufacturing sector, raising fresh concerns about demand in China, the world's No. 2 consumer of crude after the U.S.
China's manufacturing purchasing managers' index, or PMI, fell to 50.6 in April, below the 50.9 expected by economists. China has been the driver for much of the oil-demand growth since the financial crisis of 2008, and indicators of slowing demand there can weigh on oil prices.
"All of these things over the last couple of weeks have reinforced the idea in the oil market that growth continues to be slow around the world," said Andy Lipow, president of Lipow Oil Associates, a Houston consulting firm.
Gasoline stockpiles last week fell 1.8 million barrels, the EIA said, while stocks of distillates rose 500,000 barrels. Refinery utilization rose 0.9 percentage point to 84.4% of capacity.
Analysts surveyed by Dow Jones Newswires had expected oil inventories to rise just 800,000 barrels. Gasoline stocks were seen falling 600,000 barrels, while distillate stocks were projected to rise 300,000 barrels and refinery runs were seen rising 0.7 point.
Front-month June reformulated gasoline blendstock, or RBOB, settled 8.27 cents, or 3%, lower at $2.7193 a gallon. June heating oil declined 5.07 cents, or 1.8%, to $2.7889 a gallon.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.