US Crude Down 4% To Hit 6-1/2-Year Low On Surprise Stock Build
NEW YORK, Aug 19 (Reuters) - U.S. crude oil slumped over 4 percent on Wednesday to hit a 6-1/2-year low and almost break below $40 per barrel, as a huge unexpected stockpile build in the United States reinforced concerns about a growing global oil glut.
U.S. crude inventories rose 2.6 million barrels last week to 456.21 million barrels, the government's Energy Information Administration said.
The figures stunned energy market analysts on Wall Street, as well as traders and investors who had been expecting a stockpile drawdown despite the peak U.S. summer driving season nearing its end and refinery problems cutting fuel processing capabilities.
Late Tuesday, the American Petroleum Institute, an industry group, forecast a 2.3 million-barrel drawdown for the week to Aug. 14. A Reuters poll of analysts had predicted an 800,000-barrel decline.
"The numbers were a total surprise with crude showing a build when the whole Street was forecasting a draw," Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York, said.
The front-month futures contract in U.S. crude, which expires on Thursday, settled down $1.82, or 4.3 percent, at $40.80 a barrel. It dropped as low as $40.46 during the session, its lowest since March 2009.
"If oil is to fall to $40 a barrel, there is nothing to suggest it won't fall even further," Fawad Razaqzada, a London-based technical analyst for crude on forex.com, said, predicting 2003 lows of below $30 if the slide did not stop.
The front-month in Brent, the global benchmark for oil, settled down $1.65, or 3.4 percent, at $47.16 a barrel. It extended its losses to $2 in post-settlement trade.
BP PLC's Whiting, Indiana, refinery, the largest in the Midwest, shut down its main 240,000 barrel per day crude unit unexpectedly at the start of the week covered by the data. Refinery utilization in the U.S. Midwest region fell to 92.2 percent last week, the biggest weekly drop in eight months.
U.S. gasoline futures fell even more than crude, tumbling 6 percent to a six-month low, despite stockpiles of the fuel falling 2.7 million barrels, compared with the 1.6 million-barrel drop expected by analysts in the Reuters poll.
U.S. diesel futures lost 3 percent, hitting six-year lows.
Oil has lost a third of its value since June on signs of creeping U.S. production amid record crude pumping in the Middle East.
"Couple that with the stronger dollar and weakness out of China and it's a recipe for lower prices ahead," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
(Additional reporting by Lisa Barrington in London and Henning Gloystein in Singapore; editing by Frances Kerry, Chris Reese and Marguerita Choy.)
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